The FTSE 100 fell on Thursday following the announcement of new COVID restrictions by the UK government and soaring cases across Europe.

The FTSE 100 was down 0.2% at 7,322 at the time of writing around midday on Thursday.

“The page has been turned on the recovery story playing out on the financial markets this week, with the new chapter turning into  a tale of woe for many ‘reopening’ stocks,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“News that fresh social restrictions are being imposed in the UK, amid worries that the new strain is more infectious have put a brake on the rebound of not just travel stocks but bricks and mortar retailers, and hospitality firms.”

Although the FTSE 100 fell, the selling was when mild when compared to the initial volatility in markets when Omicron was first observed.

Roll Royces was the worst performer on the FTSE 100 after the engine maker was hit by a double whammy of a disappointing trading update and the prospect of reduced flights in the near term.

“Rolls Royce is the biggest faller on the FTSE 100, with investors disappointed with the progress made, even before the latest Covid storm hit the airline industry,” Street said.

“There continues to be a gradual recovery in engine flying hours, a key metric given its core business is reliant on manufacturing and servicing commercial jet airlines, but it’s still slow progress.  They are still at half of normal levels and had been expected to recover to 55% by the end of the year. It shows what a climb Rolls Royce still needs to make to regain its pre-pandemic form and the Omicron variant is clearly another set-back.”

IAG was also a big faller as investors departed from travel stocks across Europe. IAG shares were down 2.8% at the time writing.

Despite the FTSE 100 falling, 41 constituents were positive at midday on Thursday.

DS Smith was among the gainers as revenues jumped 22% helped by their sustainable packaging offering and COP26.

“COP26 has helped DS Smith turn its box volumes up to record levels. The packaging giant has a leading position when it comes to sustainable packaging, so sentiment around the environment and responsible corporate behaviour, which has heightened in recent months, has quite literally paid dividends,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

Gteatland Gold have released an update on their drilling programme at the world-class Havieron gold asset with ‘significant mineralisation’ found in 19 of the new holes.

Their joint venture with Newcrest has now completed 219,561m of drilling from 266 holes and the company says there is another 90,000 meters planned by June 2022.

The recent drills uncovered further resources at HAD086W3 below the already recorded 48m of 2.2g/t Au & 0.15% Cu from 1,525m and 26.9m of 3.7g/t Au & 0.26% Cu from 1,538.1m.

However, despite the upbeat findings from the drill campaign, Greatland Gold shares remained little changed on Thursday morning.

Indeed, the Greatland Gold share price is trading at the lowest levels since late August 2020 and has given up nearly two thirds of their value YTD.

Greatland Gold have recently completed a fundraise they say was to help accelerate the development of the Havieron asset.

The fundraise, by way of a placing, was completed at 14p, a level now above the current Greatland Gold share price.

“The drill programme at Havieron consistently delivers high grade results and intersects significant mineralisation which continues to support a significant upgrade of the Inferred Mineral Resource to an Indicated Mineral Resource,” said Shaun Day, Chief Executive Officer of Greatland Gold.

“This latest drilling demonstrates continuity within the South East Crescent and together with significant assay intercepts running into the broader mineralized zonation. In addition, we have intercepts over 250 meters below the existing South East Crescent Mineral Resource which demonstrates the opportunity to further expand the ore body.

“As we head towards 2022, all drill programmes will be focused on growth, including new targets outside the known Havieron system with drill testing commencing at Havieron North and Zipa while we await the assay results of the initial drilling into these targets.

“With eight drill rigs operational, construction activities advancing and potential for significant upside for the scale and life of Havieron, there continues to be tremendous progress in the development of this world class project.”

Video editing technology company Blackbird plc have announced a successful capital raise to fund expansion into new markets.

The focus will be on their ‘Powered by Blackbird’ intellectual property that provides lighting fast video editing and content publishing to organisations.

The funds will be deployed in the growth of their engineering team and expansion of their patent portfolio.

“With our core business in rude health we are incredibly excited to announce a placing to raise £8.0 million to enter new markets with our “Powered by Blackbird” intellectual property,” said Blackbird plc CEO, Ian McDonough.

“Recent contract wins for the Company include Univision, Eurovision Sport and a further expansion with TownNews to 80 regional US stations. “Powered by Blackbird” already has its first customer in our current sector focus of professional Media and Entertainment. The Company has also recently been awarded “Best Tech Company 2021” by the SportsPro OTT awards.

“While our reputation builds in the professional Media and Entertainment vertical, our technology has advanced through API development and the first “Powered by Blackbird” licence deal has shown our applicability to companies across multiple video markets. The creator economy, enterprise video and content distribution markets are of huge scale and have attractive growth rates offering a massive opportunity built around our existing intellectual property.”

Blackbird have recently posted record results for the six months to 30th June which saw revenues rise 21% to £867k.

The Lloyds share price has was subject to heighten volatility as the Autumn started but has since become stuck in a very tight trading range.

While this may not be an immediate cause for concern for some, it does raise the question why Lloyds shares haven’t joined in the rally to the extent other companies have since the announcement of the new COVID variant.

Omicron was announced 26th November and caused the most severe selling of equities in 2021.

All industry groups were hit in a broad sell off as the market panic sold into low volumes due to the Thanks Giving Holiday.

The Lloyds share price was particularly heavily hit that day giving up more than 7% of it’s value. However, unlike many shares in the FTSE 100, Lloyds is yet to recover the losses recorded since.

Indeed, Lloyds shares are down 4.88% from the close 25th November 2021 at the time of writing. This ranks Lloyds 89th out the 100 shares in the FTSE 100 since in terms of performance since the close 25th November. Darktrace is the worst performer, down 13%, whilst BHP is the top performer, gaining 7.9%.

Lloyds shares in 2022

The underperformance in Lloyds share can be attributed to a range of factors but the stand out driver will be the uncertainty cast over whether the Bank of England will now hold off from hiking rates in 2021.

Lloyds shares had previously surged following strong UK economic news that significantly increased the chances of a rate hike in the bank’s December meeting.

#Markets appear to be deciding that the #Omicron variant is not going to have too much impact on the recovery. The US Fed and Bank of England meet next week. Will they have a similar view? It's time to normalise #interestrates and "retire" transitional.

— Jamie Constable (@jamie_constabl) December 7, 2021

With possible economic disruption caused by the new Omicron variant, Lloyds may miss out on the opportunity to achieve increased Net Interest Margins with higher rates, if the Bank of England keeps rates on hold.

This will not only be a concern for investors around the December BoE meeting, but will persist into 2022 as uncertainty reigns.

With the UK government outlining new restrictions, the UK could well see a economic downturn in Q1 which would not only push back expectations of a rate hike, but even impact the quality of Lloyds’ assets such as mortgages and loans.

The UK government has now ended furlough and may be hesitant to reintroduce fresh measures alongside COVID restrictions. This would have a detrimental impact on the UK economy and UK-focused shares such as Lloyds.

If this scenario plays out, investor should expect the Lloyds share price to underperform the wider market in a similar way to the last two weeks.