MARKET WRAP: FTSE 100 falls back below 7,100, oil higher, cryptos steady

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imageEconomy10 hours ago (Sep 08, 2021 16:38)

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Key Points

  • FTSE 100 closing price of 7,095, -0.8%
  • Dunelm, B&M rally after results
  • Airlines higher as travel rules set to change
  • USD rallies, EUR/USD tests 1.18
  • Oil higher as US struggles to resume production
  • Cryptocurrencies steady after Tuesday flash crash

By Samuel Indyk – The FTSE 100 closed back below 7,100 for the first time since 20th August as European stocks struggled to gain any traction on fears global emergency stimulus is set to be withdrawn.

The Fed’s James Bullard kicked off tapering fears again, calling for the Fed to make an immediate start to slow the pace of bond purchases. The comments come ahead of Thursday’s European Central Bank meeting where the governing council are set to announce a slower pace of bond buys in the fourth quarter, although President Lagarde will likely attempt to play this down as more of a technical adjustment than a withdrawal of stimulus.

Bucking the trend were two pandemic winners in the UK, Dunelm (LON:DNLM) and B&M (LON:BMEB). Both saw shares continue their pandemic-inspired rally following trading updates. Dunelm announced it was to pay a special dividend following its FY results, while adding that the trading at the start of this FY has been better than anticipated.

In an unscheduled trading update, discount retailer B&M said it now expects H1 profit to be between £275-285 million, well above the current analysis consensus forecast of £235 million.

Airlines based in the UK were also trading higher amid reports that the government is set to abandon its traffic light system for international travel for a simpler two-tier method. Bosses of airlines have been critical of the UK’s traffic light system and will be hoping that the new measures might provide more clarity for international travellers.

FTSE 250 airlines Wizz Air (LON:WIZZ) and EasyJet (LON:EZJ) both closed higher following the reports.

The USD was strong with the US Dollar Index trading at its highest level since August 27th, the day of Fed Chair Powell’s speech at Jackson Hole. The USD strength pushed EUR/USD lower towards 1.18 before finding support.

GBP/USD was also lower with focus on UK Prime Minister Johnson’s latest tax hike to help fund social care and the National Health Service. There may be a worry that this is a sign of things to come as pandemic emergency measures are unwound and tax increases are required to attempt to lower the national debt.

WTI and Brent crude futures pushed higher as the impact on production from Hurricane Ida continues to be felt in the Gulf of Mexico. The latest data from the Bureau of Safety and Environmental Enforcement, released on Tuesday, showed a total of 1.444 million barrels of oil per day is currently shut in, equivalent to 79.33% of Gulf of Mexico production.

Natural Gas also continued its recent surge, trading above $5.00 per million BTU, the first time above that level since February 2014, when the US was gripped by the Polar Vortex. This time, the impact of Hurricane Ida is causing an impact on nat gas production from the Gulf with 77.9% currently shut in.

Cryptocurrencies were steady after the flash crash on Tuesday which saw the total market cap of all coins briefly drop below $2 trillion.

Bitcoin was hovering above its 200-day moving average around $46,000 for much of today’s trading session after breaking below that level during the spike lower on Tuesday.


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MARKET WRAP: FTSE 100 falls back below 7,100, oil higher, cryptos steady

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