MARKET WRAP: FTSE 100 declines, cryptocurrencies plunge, oil falls, USD jumps

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imageEconomy9 hours ago (Sep 07, 2021 16:35)

© Reuters.

Key Points

  • FTSE 100 closing price of 7,150, -0.5%
  • Stock markets fall on global growth concerns
  • Meggitt declines as TransDigm pulls out of the bidding
  • DS Smith rallies after results
  • Crude lower on demand fears
  • Gold falls back below $1800/oz
  • Cryptocurrencies tumble, Bitcoin below $50K

By Samuel Indyk – The FTSE 100 fell on Tuesday, along with other major global bourses, as fears of a global growth slowdown weighed on markets. Goldman Sachs (NYSE:GS) earlier cut its growth forecasts for US GDP amid the spreading Delta variant and waning impact of Biden’s stimulus.

One of the big underperformers in the UK was Meggitt (LON:MGGT), whose shares declined after TransDigm (NYSE:TDG) said it would not be making a bid for the company. There had been expectations that TransDigm would enter a bidding war with Parker-Hannifin (NYSE:PH) for the aerospace parts manufacturer but with TransDigm out of the running, Meggitt can continue with the agreed deal with Parker-Hannifin.

At the other end was DS Smith (LON:SMDS), whose shares rallied after the company said strong demand has helped cover rising costs of paper, due to higher costs of energy and transportation.

The USD was stronger which drove GBP/USD back below 1.3800 for the first time since Thursday. The stronger USD also helped push gold prices lower with the yellow metal dropping back below $1800/oz.

WTI and Brent crude futures were both falling for a second day after Saudi Arabia cut its official selling price for Arab Light crude to Asia to a $1.70 /barrel premium versus the DME Oman Benchmark, the largest price cut in over a year.

“The market was expecting a more moderate cut of $0.20/barrel – $0.40/barrel, so the downside surprise has spurred concerns over the health of Asian demand, resulting in increased competition between producers to sell marginal barrels within the region,” writes StoneX Energy Analyst Kevin Solomon.

Cryptocurrencies puked lower in a broad based sell off for digital assets on the day that El Salvador became the first country to accept Bitcoin as legal tender.

“Attempts to pump up the price of Bitcoin to celebrate its adoption as legal tender in El Salvador have fallen flat with the cryptocurrency deflating in value slightly over the past 24 hours,” wrote Hargreaves Lansdown (LON:HRGV) Senior Investment and Market Analyst Susannah Streeter.

Bitcoin has fallen around 12% in the last 24 hours and now trades back below $50,000 to its lowest level since August 9th.

Other major cryptocurrencies showed similar price action with Ethereum dropping over 15%, Cardano falling by over 22% and XRP dropping over 23%.


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MARKET WRAP: FTSE 100 declines, cryptocurrencies plunge, oil falls, USD jumps

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