- FTSE 100 closing price of 7,062.1, -1.5%
- Fed minutes puts Q4 taper in view
- Basic materials and oil & gas names fall amid commodity sell-off
- Burberry declines on China growth slowdown fears, regulation
- USD stronger following Fed, GBP/USD drops
- Bitcoin briefly drops below $44,000
By Samuel Indyk
The minutes from the meeting in July signalled that a majority of participants favour tapering asset purchases later this year, if the economy were to evolve broadly as they anticipated.
The news weighed on stock markets around the globe, with the FTSE 100 not immune to the sell-off.
Mining companies were some of the worst hit as copper traded below $4/lb for the first time since 1st April. Iron ore prices also tumbled with futures in Singapore dropping to their lowest level since December on expectations that China steel consumption may weaken over the coming months.
Oil & Gas names didn’t fare much better with Royal Dutch Shell (LON:RDSa) and BP (LON:BP) both near the foot of the blue-chip index. WTI and Brent crude prices both took a dive amid fears that the spread of the Delta variant, particularly in Asia and the US, will cause the recovery to slow and dent oil demand.
Wednesday’s US inventory data also showed an unexpected increase in gasoline inventories in the latest week, potentially signalling lower than expected gasoline demand.
Luxury names in Europe were weak with Burberry (LON:BRBY), Richemont (SIX:CFR), Kering (PA:PRTP), and LVMH (PA:LVMH) all coming under selling pressure. The sell-off appeared to emanate from comments from China President Xi Jinping, who said the country needs to “regulate excessively high incomes”. The luxury sector makes a high proportion of its revenue in China and the sector looks like the next to be harmed by tighter regulation.
In FX markets, the DXY was stronger following the Fed minutes as the prospect of less loose monetary policy lifted the USD.
GBP/USD dropped to its lowest level in four weeks amid the broad-based USD strength and ahead of tomorrow’s retail sales data. The data caps off the week which has seen strong labour market data and softer than expected consumer inflation metrics.
Bitcoin traded lower on Thursday as the Fed minutes dented appetite for riskier assets. On a technical picture, the world’s largest cryptocurrency still trades below its 200-day moving average, after dropping below the level earlier this week.
MARKET WRAP: FTSE tumbles as Fed dents stocks, USD stronger, Oil plunges
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