Markets jittery over Omicron as Opec+ meets; UK household wealth soars – business live | Business

UK household wealth soared last year thanks to rising house prices, pension values and savings.

Households’ net worth grew to £11.2 trillion in 2020, an increase of 8.4% during a year in which the pandemic hammered the economy.

It’s the second highest growth since the 2008 global economic downturn, the Office for National Statistics says. Over 40% of this increase in households’ net worth was due to land becoming more valuable, due to a 7.3% increase in average house prices.

This rise was likely to have been affected by the reduction in stamp duty rates, the ONS says.

Pensions added another 40%, mainly due to an increase in the value of defined benefit pension schemes, due to historically low gilt yields.

“Currency and deposits” contributed 21.5% of the growth in households’ net worth, as due to the jump in savings during lockdowns and the furlough scheme which protected incomes.

The increase in land values also lifted the UK’s net worth, which rose by £500bn to £10.7 trillion.

But general government net worth fell by £445bn in 2020 to minus £1,494 billion, the largest annual fall recorded, due to the surge in borrowing to cover the cost of the pandemic.

The UK’s financial net worth increased by £63bn, but remained negative at around minus £500bn in 2020, meaning the value of the UK’s financial liabilities continued to exceed the value of financial assets.

The ONS explains:

This was the first time UK financial assets increased more than financial liabilities since 2016 and have therefore made a positive contribution to growth in the UK’s net worth.

This was mainly attributed to greater overseas bank deposits and loan contracts with UK banks. The factors that would have contributed to this include: the availability of financial support for businesses, cheaper forms of funding, changes in demand and reluctance to spend because of the uncertainty during the coronavirus (COVID-19) pandemic.

The Brazilian economy has fallen back into recession, as high interest rates, rising inflation and a drought all hit growth.

Brazil’s GDP fell by 0.1% in the third quarter of 2021, following a 0.4% contraction in April-June, statistics agency IBGE reports. That puts Latin America’s largest economy into a technical recession (two consecutive quarters of economic contraction).

Brazil’s economic rebound from the worst of the COVID-19 pandemic has been hit by a rise in inflation, which led its central bank to raise interest rates several times this year .

Brazil has also been hit by the worst drought in almost a century, leading to water shortages and the threat of power blackouts, as the country has tried to recover from the pandemic.

After another choppy morning, the UK stock market is still in the red.

The FTSE 100 index is down 64 points, or 0.9%, at 7104 points, back towards the seven-week lows earlier this week.

Despite omicron worries, airline stocks are actually higher today, with IAG up 1.8% and budget rivals easyJet gaining 3.8% and Wizz Air rising 3.3%.

Oil producers BP and Royal Dutch Shell are also a little higher, ahead of the Opec decision.

But cruise operator Carnival is down 6%, suggesting some concerns that passenger numbers could be hit by Omicron worries, after the US reported its first case yesterday.

Overall, the market remains acutely sensitive to anything about omicron and will respond on positive or negative headlines with abandon, says Neil Wilson of Markets.com:

Sector wise, healthcare and consumer defensives won out yesterday, quality tech provided some resistance with Apple and Microsoft barely declining.

Momentum was a problem with ARKK [the popular innovation-focused fund] down almost 7%, almost 40% below the all-time high struck earlier this year. This is mirrored today on the FTSE with the likes of Unilever and United Utilities among the few risers.

Shell and BP also higher as crude rallied 1% though oil remains under a heap of pressure with OPEC+ set to meet today to decide on whether to increase output by 400k bpd in January. A pause in the loosening of output controls would help sentiment in the market and is increasingly expected.

The decision on whether Opec and its allies will lift oil production next month as planned, or freeze output at December’s levels, hangs in the balance.

Under its existing pact, Opec+ agreed to raise output by 400,000 barrels per day (bpd) each month, as it reverses the large cuts introduced early in the pandemic.

But market uncertainties mean its next move is uncertain, according to the latest words from delegates, as Reuters explains:

Two OPEC+ sources said the group would discuss pausing the January increase as an option, while two sources said they expected the 400,000 bpd rise to go ahead.

One source even said he expected a cut in production, without giving any figures.

More here: OPEC+ oil output decision in the balance as Omicron hammers prices

UK asset manager abrdn has secured a deal to buy online investment platform Interactive Investor for £1.49bn.

II says the deal will let it build on its position as the UK’s second largest DIY investment platform, with almost £55bn of assets under administration and over 400,000 customers.

II’s CEO Richard Wilson will join abrdn and continue to lead the platform, the asset manager said in a statement.

The move will boost abrdn’s position in the personal investing sector, where ii competes with rivals like Hargreaves Lansdown and AJ Bell.

Abrdn (formerly called Standard Life Aberdeen) has been looking to expand its presence in UK adviser and consumer markets. Stephen Bird, chief executive officer of abrdn, says:

“This is a unique opportunity and a transformative step in delivering our growth strategy. interactive investor is the UK’s number one subscription-based investing platform with a powerful reputation as a consumer champion.

abrdn’s scale, resources and shared vision will enable interactive investor to grow confidently and expand its leadership position in the UK’s attractive savings and wealth market.

Salih Yilmaz, senior oil analyst for Bloomberg Intelligence, suggests Opec could pause its planned output hike, while it assesses the impact of omicron.

In the eurozone, unemployment has dipped to its lowest level since the first wave of Covid-19 hit the region last year.

The euro area jobless rate dropped to 7.3% in October, down from 7.4% in September, and the lowest since spring 2020.

Eurostat estimates that eurozone unemployment has fallen by over 1.5m since October 2020, when the jobless rate was 8.4%

The youth unemployment rate also dipped in October, to 15.9% from 16% a month earlier.

But firms are also hiking their prices sharply, as they pass on higher commodity costs, energy bills, and labour costs.

Industrial producer prices in the euro area jumped by 5.4% in October alone, and were 21.9% higher than a year ago.

The increase is driven by higher energy costs — up 62.5% year-on-year in the energy sector. But there was also a 16.8% increase in intermediate goods prices (items used to make final products), and a 4.2% jump in durable consumer goods.

Neil Birrell, Premier Miton chief investment officer and manager of Premier Miton Diversified fund range, says:

“The unemployment rate in Eurozone remains stubbornly high, but it was in line with expectations. Meanwhile, producer prices came in a lot higher than expected, up 5.4% month on month, reflecting the global concerns around inflation.

The whole outlook is obviously muddled by the Omicron issue, but the data is quite clear. For now, inflation is rising fast and the ECB will have to consider this in their policy discussions, as will all other central banks.”

Crisps remain in short supply at a quarter of UK shops, a month after a software problem at Walkers hit production.

Multipack crisps were in low supply at 20% of shops surveyed last week by market researchers Kantar Public, while 4% had run out, showing no improvement on a week ago.

Painkillers paracetamol and ibuprofen were also in short supply at 16% of shops, while 8% had run out of frozen turkeys after worried consumers shopped early for Christmas to avoid missing out.

Sarah Riding, retail & supply chain partner at the law firm, Gowling WLG, says:

“From a supply chain perspective, overcoming these challenges in the coming weeks will be a litmus test of the ability to utilise key supply chain survival tactics for when normality returns in the New Year – something which is borne out by recent comments from the WTO.

“As the global variables at play subside, it is vital that businesses use this experience to strengthen their supply chain strategies and efficiencies around vendor dependencies, the regularity of supplier reviews and of course ethics.”