MARKET WRAP: FTSE 100 edges higher, GBP strong, oil rallies, cryptos surge

imageEconomy1 hour ago (Sep 02, 2021 16:37)

© Reuters

Key Points

  • FTSE 100 closing price of 7165, +0.2%
  • Energy names lift FTSE
  • GBP/USD breaks above 1.3800
  • Cryptocurrencies surge, Cardano breaks $3.00

By Samuel Indyk – The FTSE 100 finished higher on Thursday, lifted by a rally in energy names. However, gains were hampered by a number of large-cap companies going ex-dividend, including BHP Group (LON:BHPB).

Melrose Industries (LON:MRON) rose to the top of the blue-chip index as the group said trading in the first half of the year had been better than expected, reflecting a strong performance in automotive and powder metallurgy.

“Melrose knocked its first half results out of the park, with Automotive responsible for the majority of the group’s underlying profits,” said Hargreaves Lansdown (LON:HRGV) Equity Analyst Laura Hoy. “Restructuring efforts are starting to bear fruit and barring any further disruption from the semi-conductor shortage, the division could hit it’s 10% margin target if sales recover to 2019 levels in 2022.”

Barratt Developments (LON:BDEV) was one of the laggards following its own trading update which showed decent profits and a dividend equal to a historic yield of 4%.

“Some investors may be fretting that the current surge in prices in unsustainable and the result of the stamp duty tax break, especially considering the fall in net private reservations through July and August, even if the UK housing market does still seem to be suffering from a shortage of supply,” wrote AJ Bell Investment Director Russ Mould.

BP (LON:BP) and Royal Dutch Shell (LON:RDSa) were trading near the top of the FTSE 100 as both Brent and WTI moved higher, the latter back above $70 per barrel. Wednesday’s EIA data showed inventories dropped by 7.2 million barrels in the latest week, which is continuing to support prices. Separately, the latest jobless claims data from the US showed the number of citizens filing for new claims dropped to its lowest level since the pandemic began, indicating that demand might continue to recover.

GBP/USD edged higher and broke back above 1.3800 amid some USD weakness and general risk-supportive tone.

“If we get weak nonfarms [payrolls] then that cable narrative could extend a little further but because we’re assuming still a strong, or at least an above-expectations nonfarm reading, then we wouldn’t want to chase sterling higher versus the dollar,” said CIBC Head of G10 FX Strategy Jeremy Stretch.

The big moves of the day came in cryptocurrency markets where Bitcoin traded above $50,000 but failed to extend towards $51,000, where the 61.8% Fib level resides from the April high to July low.

Cryptocurrencies related to decentralised finance (DeFi) applications and non-fungible tokens (NFTs) continued to outperform with Cardano breaking above $3.00 for the first time and cementing its place as the third largest cryptocurrency by market cap. All eyes are turning to the Alonzo Purple upgrade which is set to take place on 12th September and will allow smart contracts on the network.


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MARKET WRAP: FTSE 100 edges higher, GBP strong, oil rallies, cryptos surge

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