Ikea has increased the price of its flat-pack furniture by up to 50%, blaming supply chain costs caused by Covid-19, in a move that will further stoke growing concern about the rising cost of living.
After customers complained that prices appeared to have risen sharply after Christmas, the retailer said it was no longer able to absorb increased costs and was passing them on to consumers.
An Ikea spokesperson tweeted:

“Unfortunately, there has been a significant increase in costs across the supply chain, including in raw materials, transport and logistics.

As this is still ongoing it is necessary to increase prices across many of our products.”

Archived versions of Ikea’s website from as recently as October showed significant price increases, including a Malm desk that has gone up from £99 to £150, a jump of more than 50%. More here:

Other European stock markets had a weaker day, weighed down by Omicron concerns.

The pan-European Stoxx 600 dropped back from yesterday’s five-week highs, finishing 0.2% lower.

Germany’s DAX (-0.7%) and France’s CAC (-0.27%) lost ground, having rallied yesterday (when the City of London was still on holiday).

The record surge in French Covid cases, with over 200,000 reported in the last 24-hours, highlighted the dizzying speed at which the Omicron variant is spreading.

The US housing market lost some momentum last month.

Contracts for home sales dropped by 2.2% in November, weaker than expected, according to the National Association of Realtors’ (NAR) Pending Home Sales Index.

Limited housing stocks, high prices, and worries about the pandemic may all have weighed on the market.

Lawrence Yun, NAR’s chief economist, said:

“There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices.

While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability.”

Financial markets are poised for a bumpy ride in 2022 in the face of soaring inflationary pressure, rising interest rates and ongoing disruption to international supply chains caused by the Omicron variant of coronavirus, experts have said.

Analysts and financial investors said Omicron’s emergence had raised the prospect of a stagflationary start to the new year, with weaker levels of economic growth despite intensifying price pressures in already stretched supply chains.

The winter energy crisis will also weigh on Europe’s economies.... although many pundits suggest stocks could still be higher in a year’s time.....

What should investors be watching out for next year? Possible risks include a possible Covid-19 ‘super-variant’, surging inflation, and a financial market crash as central bankers withdraw stimulus.

More here:

UK travel stocks are dropping further into the red, as global omicron cases continue to hit record levels.

IAG, which owns British Airways, are now down 2% while holiday operator TUI has dropped 5%, with cruise liner group Carnival off 4.6%.

Omicron infections continue to rise very sharply in many countries. France, for example, has reported a daily record of over 200,000 new Covid-19 cases.

Reuters has the details:

France is seeing a “tsunami” of Covid-19 infections, with 208,000 cases reported over the past 24 hours, a new national and European record, Health Minister Olivier Véran told lawmakers on Wednesday.

France has been breaking infection records repeatedly over the past few days, with Tuesday’s 180,000 cases already the highest for a country in Europe, according to data on Covidtracker.fr.

“This means that 24 hours a day, day and night, every second in our country, two French people are diagnosed positive,” Veran said.

“We have never experienced such a situation,” he said, describing the increase in cases as “dizzying”.

Global COVID-19 infections have hit record highs over the past seven days, Reuters data showed on Wednesday, as the new Omicron variant spread rapidly, keeping many workers at home and overwhelming testing centres.

Véran added that the situation in hospitals was worrying because of the Delta variant, with Omicron yet to have an impact. The flu will further complicate things for hospitals, he said. Our Covid-19 liveblog has more details:

Wall Street is heading lower, with the tech-focused Nasdaq Composite down 92 points, or 0.6%, at 15,691.

UK housebuilders, a gauge of economic optimism, are in demand today with Persimmon and Berkeley Homes both gaining 2%.

Royal Mail are also in the top risers, up 2.8%, behind engineering company Spirax-Sarco which is up 3.5%.

The pound has risen to its highest level against the US dollar in almost six weeks.

Sterling has gained half a cent to $1.348, the highest since 19th November.

Optimism that Omicron will be less severe then Delta are helping the pound, says Jeffrey Halley of OANDA:

“Sterling looks to be catching an omicron tailwind as cases remain high, but hospitalisations low,”

Wall Street has made a quiet start to trading - having already rallied earlier this week.

There’s some caution after US Covid infections hit record levels, while trading volumes are still modest due to the post-Christmas lull.

The Dow Jones Industrial Average of 30 major US companies has gained 60 points, or 0.15%, to 36,458.22.

The broader S&P 500 index has gained nearly 8 points to 4,794, towards the record high set on Tuesday before stocks slipped back.

Bitcoin is not having a happy December.

The largest cryptocurrency is on track for its worst month since May (when it took a sharp tumble.) It’s dropped to around $47,000 today, from $57,148 at the start of the month.

That’s some way off its record high of over $68,000 this year, but still up around 60% this year (outpacing the FTSE 100’s 15% gains).

Adrian Kenny, senior sales trader at the UK based digital asset broker GlobalBlock, says there is anxiety over options contracts which expire at the end of the year, possibly creating volatility:

Bitcoin failed to hold $52,000 after a short-term breakthrough on Monday and continued to slip below $49,500 Tuesday in a move that seemed to pull the broader market to a lower low.

Whilst Bitcoin’s overall trading volumes were consistent, a total of 129,800 option contracts (with value of just over $6 billion) are set to expire on the 31st December which is believed to be fuelling overall wary sentiment for the short term. This is also indicated by the Fear and Greed index showing a sentiment of 27, a widely monitored indicator within the crypto space.

Electric cars have gone mainstream in Europe – they accounted for nearly a fifth of all car purchases in the UK last month. Yet one piece has been missing up to now: European batteries.

That is now changing. On Tuesday night, Northvolt, a startup, produced its first lithium ion battery cell at a plant in northern Sweden. It is the first of a series of new factories that investors hope will allow Europe to carve out a big proportion of the electric vehicle market – and weaken the stranglehold built up by manufacturers in China, Japan and Korea.

The Northvolt Ett site will be the first European-owned plant to produce at so-called gigafactory scale. Gigafactories are generally considered to be those capable of producing enough batteries each year to provide about 15 gigawatt hours (GWh) of cumulative storage.

Here’s the full story:

Pubs, bars and restaurants missed out on more than £10,000 each in the week leading up to Christmas, figures show, as concern about the Omicron variant and government guidance to work from home ruined the crucial festive period for the second year in a row.

Sales were down by as much as 60% compared with the same period in 2019, according to the trade body UKHospitality.

Trading had been close to pre-pandemic levels before the emergence of Omicron but plummeted as consumer confidence collapsed, it said.

Work from home guidance meant city centre venues were particularly hard hit, while takings at the average venue were down £10,335 compared with 2019 levels on a nationwide basis.

2021 has been the busiest year for stock market floats in London since the financial crisis, although some have performed better than others.

122 companies listed on the London Stock Exchange (LSE) this year, raising over £16.8bn. LSE has raised more capital for IPOs than any year since 2007, and more (they report) than Amsterdam and Paris put together.

London’s underperformance in the last couple of years, compared to the US, is partly because there are much fewer tech companies listed here.

But this year, 39% of all IPO capital in London was raised by tech or consumer internet companies, with a combined market capitalisation of £31bn at IPO. This has included Oxford Nanopore (which has rallied from 425p to 715p), and Wise (which has dipped from 800p to 762p).

Less successful IPOs included Deliveroo, which slumped by a quarter on its debut and is now at record lows (at 212p, having floated at 390p).

Julia Hoggett, CEO of LSE plc says:

“2021 has demonstrated the strength of the UK capital markets with our most active year since 2007.

It has also highlighted the vital role LSEG’s capital markets play in supporting innovation, growth and the transition to a low-carbon economy.”

The Telegraph has calculated that more than one in three stock market debuts are trading below their listing price.

2021 was also a blockbuster year for capital markets across the globe, with companies raising over $12tn altogther through selling shares and bonds or taking out loans, the FT reports.

The FTSE 100 is firmly on track for its best month in over a year.

The blue-chip index has gained 5.3% in December, as it bouunced back from a late-November tumble when Omicron fears rocked markets.

That would be its best month since November 2020, when it surged 12% - lifted by the US election, then successful vaccine results from Pfizer (closely followed by Moderna and then AstraZeneca) which sparked a global rally.

Data watch: Loans to households and businesses in the euro area picked up last month, despite the rise in Covid-19 cases this winter

Reuters has the details:

Lending to euro zone companies accelerated for the third straight month in November, reversing in part a steady decline in the early part of the year, European Central Bank data showed on Wednesday.

Lending to euro zone businesses expanded by 2.9% last month, a pick-up from 2.5% in October but well below the 7% recorded a year earlier. Household lending growth rose to 4.2% from 4.1%, holding broadly steady over the past six months.

The annual growth rate of the M3 measure of money supply, mostly a reflection of the ECB’s copious bond purchases, dropped to 7.3% from 7.7%, below market expectations for 7.6% growth.

Although London has rallied to 22-month highs, Asia-Pacific markets dipped today as Omicron fears still lingered.

South Korea’s KOSPI fell 1.1%, while China’s CSI 300 lost almost 1.5%.

Traders are wondering what impact Omicron will have in Asia once it starts to escalate there as well - as factory closures or disruption at ports will knock global supply chains.

Raffi Boyadjian of XM explains:

Vaccination rates vary greatly across Asia and even those countries with a very high uptake level have yet to get started with booster jabs. Hence, there’s a fair bit of uncertainty hanging over the growth picture in the first few months of 2022.

These jitters, combined with ongoing concerns about China’s regulatory crackdown on its tech sector are weighing slightly on Asian markets today. Shares in Hong Kong, China and South Korea fell the most.

Europe also succumbed to some profit-taking, though London’s FTSE 100 jumped about 1% as it played catchup after a two-day bank holiday. US stock futures were positive too, indicating sentiment is more likely to improve than not during the course of the day.

After an hour’s trading, London’s index of top shares is holding its gains.

The FTSE 100 has now hit 7457 points, up 1.1% or 85 points, a new 22-month high -- as it recovers all its pandemic losses since the February 2020 crash.

After a four-day break, City traders (and bloggers) are catching up with gains in the US and Europe earlier this week.

Analysts at Saxo Bank say there’s been a “blistering rally in equity markets”:

The Omicron variant continues to rage and fails to register on this market, even as global cases topped a million for the second day running.

Forecasts that the UK economy will outperform G7 rivals next year could also be lifting the mood today.

Economists expect Britain’s GDP to grow faster than major rivals in 2022, as The Times explained yesterday:

UK GDP in 2022 could hit 4.6%, slowing from 6.9% this year, but fast enough to bring the UK back to its level before the outbreak of the pandemic in March 2020, according to economists at S&P Global.

Economists at Goldman Sachs predict the UK will grow by 4.8% in 2022, while HSBC expects 4.7% expansion in the UK.

In contrast, predictions for other G7 countries range from 2.2% for Japan to 4.3% for Italy. Goldman expects the US to grow by 3.5%.

The International Monetary Fund also expects Britain to grow faster than the rest of the G7 club, with a GDP prediction of 5% for 2022.

More here: Britain to recover the fastest of G7 countries

However, the UK did also suffer a rather sharper plunge in 2020 than G7 rivals (UK GDP shrank over 9%, the worst in a century), meaning it has further to climb back. The US, in contrast, has already reached its pre-pandemic size.

Travel stocks are missing out on today’s rally in London.

British Airways parent company IAG (-1%) is the top faller on the FTSE 100.

Among smaller firms, holiday operator TUI (2.9%), and cruise operator Carnival (-2%) are also weaker, reflecting worries that the pandemic will continue to hurt travel.

Despite pushing global markets to around record levels this week, investors are still monitoring Omicron closely.

While there’s optimism that the restrictions in force in some countries won’t last for very long, any further disruption to supply chains could hurt economic growth

Naeem Aslam of Think Markets says:

Investors should note that in the coming months, how nations respond to the ever rising number of coronavirus cases is likely to be the main driver for volatility in stock markets.

The United States has reported more than 4.1 million COVID-19 cases in December, which is much higher than last month’s 2.54 million cases. The cases reported over the last seven days have amounted to 231,888 [the seven-day average], which is thrice the average seen on November 27.

Despite the surge in cases, the Centers for Disease Control (CDC) has cut down its recommended isolation period from 10 days to 5 days for patients who do not seem to be exhibiting Covid-19 symptoms.

Moreover, another development on this front is that research from South Africa shows that infections from the new strain can actually improve immunity of patients against the delta variant.

Most stocks on the FTSE 100 have opened higher, as trading resumes after the City’s Christmas break.

Retail companies are among the risers in London, with JD Sports up 2.8%, Next gaining 2.6%, and DIY chain Kingfisher up 1.9%.

Engineering group Rolls-Royce, which makes and services jet engines, has gained 2.9%.

Gambling group Entain has picked up 2.8%.

Only nine of the hundred stocks on the FTSE 100 are lower, with some mining stocks dipping.