FTSE 100 gains as Omicron concerns take a backseat

The FTSE 100 gained on Monday as investors stepped in to take advantage of lower prices delivered by selling late last week.

The confidence to take shares higher stemmed from optimism around the impact of the Omicron and possibilities the strain may be Midler than first thought.

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“Monday brought a solid rise for the FTSE 100 despite the continued spread of the Omicron variant as investors reacted positively to suggestions from officials in the US and South Africa that the latest strain of Covid might carry milder symptoms,” says AJ Bell investment director Russ Mould.

“It doesn’t feel like we are out of the woods yet, particularly as, even if this definitely proves to be the case, increased transmissibility could mean a wave of hospitalisations from a lower proportion of people getting really sick.”

“It still feels like we’re in the guesswork stage of working out what the impact of Omicron will be so it would be naïve to rule out further volatility as markets attempt to work out exactly what’s going on.”

Commodity shares were big gainers and added a significant number of points to the FTSE 100 on Monday morning.

Commodity prices rose after China cut their reserve ratio and Saudi Arabia increased their oil prices.

“BP and Shell helped give the FTSE 100 some support as Saudi Arabia lifted its official oil prices as it looked to address the recent slide in crude,” said Mould.

BP and Shell were both up 1.9% at the time of writing.

The commodities space was also helped by the decision in China to cut their reserve ratio for banks.

The reserve requirement ratio (RRR) dictates how much capital banks have to hold in reserve. Lowering the RRR will improve banks’ liquidity in an effort to encourage them to increase lending and boost the economy, in the face of ongoing property concerns.

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