FTSE lags in Europe, GBP falls after GDP, oil lower as IEA cuts demand outlook

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imageStock Markets20 hours ago (Aug 12, 2021 16:28)

© Reuters

Key Points

  • FTSE 100 closing price of 7,195.1, -0.35%
  • Ex-dividends weigh on FTSE
  • Cineworld soars as US listing considered
  • GBP falls after GDP
  • Oil drops as IEA, OPEC release monthly reports
  • Bitcoin falls below $45,000 after encountering resistance

By Samuel Indyk

Investing.com – The FTSE 100 underperformed its European counterparts as a number of large companies went ex-dividend on Thursday, including AstraZeneca (LON:AZN), Barclays (LON:BARC), Royal Dutch Shell (LON:RDSa), Rio Tinto (LON:RIO), Fresnillo (LON:FRES), BP (LON:BP), and Next (LON:NXT). The companies going ex-dividend were estimated to be worth around 30 points in the blue-chip index on Thursday.

In the FTSE 250, Cineworld (LON:CINE) rallied after the cinema chain operator said it was considering a partial listing in the US or a full listing of its US Regal cinema chain to raise cash. The company was still burning through cash in June and its debt pile stands near £8.5 billion.

“Cineworld is predicting a strong recovery in its fourth quarter, having seen a gradual return of audiences since Covid rules were relaxed or removed in its core UK and US markets in late July,” writes AJ Bell financial analyst Danni Hewson. “However, the company is still burdened with an extremely large debt pile and it will be hoping that the crisis it has endured over the past 18 months doesn’t have a sequel.”

The UK economy grew 4.8% QoQ in the second quarter, benefitting from the first full month of hospitality reopening. The figure was inline with expectations but marginally lower than the Bank of England’s forecast of 5.0% growth in Q2.

“These figures knock fears over the impact of the Delta variant on the head,” said Hargreaves Lansdown fund manager at HL Select Steve Clayton. “With the big surge of the initial reopening behind us, we expect the pace of growth to moderate over the remainder of the year. But if businesses pick up the baton and start investing to support growth once more, then we could see upside to our already positive view of the prospects for the UK economy this year.”

GBP fell slightly in the wake of the data although the daily trading range in GBP/USD was narrow. The data is unlikely to have an immediate impact on the thinking at the Bank of England with focus on next week’s labour market, inflation, and retail sales data.

WTI and Brent crude futures were both trading marginally lower as the IEA and OPEC both released their monthly oil market reports. Although OPEC kept their oil demand outlook unchanged, the cartel cautioned that the spread of COVID-19 in Asia needed close monitoring.

The IEA were more downbeat on demand, forecasting that demand growth would be 500,000 barrels per day lower in the second half compared to its previous estimate.

Bitcoin fell after meeting resistance at the 50% Fibonacci retracement level from the April high to July low near $47,000. The world’s largest cryptocurrency slipped below $45,000 but still remains around 50% higher than where it was in mid-July.

Even news that Lionel Messi had received part of his signing on bonus in PSG fan tokens did little to support prices. The tokens are listed on the Socios.com sports fan engagement platform which is built on the Chiliz blockchain and uses Chiliz as its exclusive on-platform currency.

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FTSE lags in Europe, GBP falls after GDP, oil lower as IEA cuts demand outlook

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