MARKET WRAP: FTSE 100 closes flat in quiet trade, GBP/USD hits one week high

imageEconomy1 hour ago (Sep 10, 2021 16:44)

© Reuters.

Key Points

  • FTSE 100 closing price of 7027.6, +0.05%
  • IAG falls as Credit Suisse (SIX:CSGN) cuts price target
  • GBP higher on BoE bets
  • UK growth slowed in July
  • Oil continues to push higher as Ida impact weighing on production
  • Bitcoin trading below 200-day moving average

By Samuel Indyk – The FTSE 100 closed flat in relatively quiet trade with markets struggling for any firm direction. One of the notable movers was British Airways parent IAG (LON:ICAG) whose shares declined after the company had its price target cut by analysts at Credit Suisse. They reduced the target price to 195 pence from 256 pence on expectations that the airline may have to raise equity, similar to what was observed by budget airline EasyJet (LON:EZJ) on Thursday.

In FX markets, GBP shrugged off softer than expected GDP figures with GBP/USD hitting its highest level in a week. The Office For National Statistics said the economy grew just 0.1% in July, down from 1.0% in June and below forecasts of 0.6%.

Analysts at Lloyds (LON:LLOY) Bank note that the most recent projections from the Bank of England (BoE) envisage an overall rise of 2.9% in Q3 but that now looks optimistic.

“In the absence of a sizeable upward revision to the July outturn, the remainder of the quarter would need to see a sharp pick-up in activity, with average monthly growth of 1.9% required in both August and September, in order to meet the BoE’s current expectations,” Lloyds analysts said in a emailed research note.

Despite the weaker data there is still an expectation that the BoE will raise interest rates by the end of next year. This comes after the Bank of England Governor Andrew Bailey said that half of the rate-setting Monetary Policy Committee saw minimum conditions for considering an interest rate hike had been met.

WTI and Brent crude futures were both continuing their march higher in the wake of Hurricane Ida. Crude production in the Gulf of Mexico is struggling to come back online with an estimated three quarters of production currently shut-in. On Thursday, Royal Dutch Shell (LON:RDSa) announced a force majeure on some contracts, signalling that production may remain offline for longer than previously thought.

Cryptocurrencies were softer with Bitcoin trading firmly below its 200-day moving average at pixel time. Cardano was also lower ahead of a big weekend for the coin. The third largest cryptocurrency by market cap is finally getting the Alonzo Purple upgrade on Sunday, which will bring smart contracts to the network. This will allow Decentralised Finance (DeFi) applications to run on the network, making it a more viable competitor to Ethereum.


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MARKET WRAP: FTSE 100 closes flat in quiet trade, GBP/USD hits one week high

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