MARKET WRAP: FTSE higher, USD bounces, Bitcoin declines

imageEconomy4 hours ago (Aug 25, 2021 15:55)

© Reuters

Key Points

  • Marks & Spencer rallies for second day, Sainsbury’s falls
  • Morrisons set to be added to FTSE 100
  • USD bounces after recent declines
  • Oil bounces after inventory data
  • Cryptos fall after Bitcoin fails to hold $50,000

By Samuel Indyk – The FTSE 100 rose on Wednesday amid another day of quiet news flow ahead of the Fed’s Jackson Hole Symposium, which begins on Thursday.

Equity stories were thin on the ground but Marks and Spencer (LON:MKS) continued its recent rally, this time after being initiated with a ‘Buy’ rating by analysts at Deutsche Bank (DE:DBKGn). The UK retailer could be a potential takeover target, following the recent move for Morrisons.

Sainsbury ‘s (LON:SBRY), which had rallied 15% on Monday, continued to pare some of the recent gains as traders await the next move from Apollo in the supermarket wars. A potential bid for Morrisons as part of the Fortress-led offer may see them refrain from putting in an offer for Sainsbury’s.

Sticking with Morrisons (LON:MRW), the recent rally in share price following the takeover offers means they are a likely candidate to get a promotion to the FTSE 100, along with Meggitt PLC (LON:MGGT). At current market valuations, ITV (LON:ITV) and Weir Group (LON:WEIR) could be demoted to the FTSE 250.

The USD edged higher ahead of the Fed’s Jackson Hole Symposium and the key speech from Powell on Friday.

“After a strong rally at the start of the week, the move in commodity currencies and EMFX against the dollar seems to be fizzling out,” said ING analysts in a research note. “Perhaps that is not a surprise given Friday’s event risk in the form of the Fed’s Jackson Hole.”

WTI and Brent crude futures were trading marginally higher, continuing the rebound from the losses of last week. After declining every day last week, a rally on Monday and Tuesday has sent Brent back above $71/barrel after dropping as low as $64.60.

The weekly inventory data from the Energy Information Administration showed a larger than expected drawdown in US crude stockpiles. Gasoline inventories also declined more than expected, a positive sign for demand ahead of the Labor Day weekend at the beginning of September.

Cryptocurrencies pared some of their recent gains with Bitcoin dropping below $48,000 to its lowest level since 20th August. Some of the other recent outperformers also declined with Cardano dropping below $2.70 and XRP falling below $1.15.

The $46,800-$47,000 area in Bitcoin remains key support. If that breaks, it could open the door to the 200-day moving average around $46,000.


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MARKET WRAP: FTSE higher, USD bounces, Bitcoin declines

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