MARKET WRAP: FTSE 100 ends lower, USD rallies into London fix, oil falls

imageEconomy11 hours ago (Aug 31, 2021 16:18)

© Reuters.

Key Points

  • FTSE finishes lower but has best month since April
  • USD jumps into London fix
  • Oil lower as Ida weakens as it moves on, OPEC+ set to meet
  • Cryptocurrencies mixed but set for solid monthly gains

By Samuel Indyk – The FTSE 100 finished the last trading day of August lower but still managed to have its best monthly performance since April.

British Airways parent IAG (LON:ICAG) was the worst performing stock in the blue-chip index after the European Union recommended a pause on all non-essential travel from the US amid an increase in Covid-19 cases. Other major European airlines providing long-haul services were also lower, including Deutsche Lufthansa (DE:LHAG) and Air France KLM (LON:0LN7). Jet-engine manufacturer Rolls-Royce (LON:RR) saw shares decline as the company relies on its engines clocking up the miles to make its revenue.

The USD had initially weakened post Fed Chair Jerome Powell’s comments at Jackson Hole on Friday. With “substantial further progress” towards the Fed’s employment goal yet to be met, focus is turning towards Friday’s nonfarm payrolls report for clues on when the Fed might begin tapering asset purchases.

Heading into the 16:00BST London fix, month-end demand in the USD was observed which lifted the US Dollar Index into positive territory and pushed GBP/USD lower, having earlier traded above 1.38 for the first time since 17th August.

WTI and Brent crude futures were both edging lower on Tuesday as traders monitor the impact of Hurricane Ida on oil production and demand in the area.

“It will take several days at least for output to return to normal as operators will need to assess any potential damage to offshore platforms,” ING analysts said in a research note.

The hurricane hit the oil producing region just ahead of the OPEC+ decision making meeting on Wednesday. Latest source reports suggest the cartel will continue on their pre-announced path, lifting oil production by another 400,000 barrels per day from September.

Cryptocurrencies were mixed with Bitcoin steady around $47,000, while outperformance was observed in Solana and Ethereum. For the month, Bitcoin is set to return around 18% with Ethereum up 33%. Outperformance was seen in DeFi rivals, Solana and Cardano, which have rallied 174% and 110%, respectively.


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MARKET WRAP: FTSE 100 ends lower, USD rallies into London fix, oil falls

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