If the UK markets started their first trading day of 2022 by climbing the wall of worry over Omicron, they took a slight stumble on day two as inflation concerns and speculation on interest rates returned to the fore.
Overnight US bond yields rose – reflecting expectations that the US Federal Reserve might go further and faster on rates if, as the market now seems to expect, the US economy shrugs off Omicron rapidly.
This saw a rotation out of technology stocks as the prospect of jam tomorrow is less appetising when jam today is available more cheaply from undervalued stocks poised to benefit from wider economic growth.
“Elsewhere, the UK supermarkets may well be toasting a bumper festive season based on the latest figures from market research firm Kantar,” AJ Bell investment director Russ Mould said.
“Many of us were unable or unwilling to go out either because the highly transmissible Omicron variant meant we were isolating due to Covid or were in self-imposed isolation to avoid having our Christmas disrupted.
“Money that might have been spent on eating out or drinking and socialising in pubs and bars instead looks to have found its way into the cash registers of the likes of Tesco, Sainsbury’s and Morrisons, even if sales retreated slightly on record December 2020 levels. Tesco appears to have been the main winner as it grew its market share.
“Online operator Ocado was the only grocer to grow its sales year-on-year, likely benefiting from progress on its joint venture with Marks & Spencer.
“We should find out how this translates into financial performance when the supermarkets start updating the market themselves next week.”
Leave a Comment