MARKET WRAP: FTSE 100 edges lower, UK CPI jumps, oil surges

imageEconomy7 hours ago (Sep 15, 2021 16:35)

© Reuters

Key Points

  • FTSE 100 closing price of 7,018.03, -0.2%
  • Energy sector gains as oil rallies
  • Restaurant Group tumbles after results
  • USD soft, GBP jumps on higher inflation
  • Cryptocurrencies edge higher

By Samuel Indyk – The FTSE 100 edged lower on Wednesday, despite a rally in energy names as oil futures continued to surge higher.

Brent Oil Futures traded above $76/barrel for the first time since 30th July and WTI traded above $73 following the latest oil inventory data from the Energy Information Administration. Crude stockpiles fell by 6.422 millions barrels in the latest week, versus expectations for a drawdown of 3.544 million barrels, the EIA said. Distillate and gasoline stockpiles also fell during the latest week.

The decline in inventories helped push the oil price higher and energy companies followed suit, with BP (LON:BP) and Royal Dutch Shell (LON:RDSa) trading near the top of the FTSE 100. Tullow Oil (LON:TLW) was at the top of the FTSE 250 following a positive trading update pre-market.

At the bottom of the mid-cap index was Restaurant Group (LON:RTN) as the company reported a first half loss and highlighted supply chain issues and labour shortages as issues that the company is facing.

“Restaurant Group has done well to stay ahead of the pack, but the business is still loss-making which means it must find ways to accelerate revenue growth,” said AJ Bell Investment Director Russ Mould. “With inflation lifting costs across multiple industries, Restaurant Group should use this opportunity to push up its own prices to help protect margins.”

Consumer prices in the UK surged by more than expected in August, according the Office for National Statistics (ONS). The CPI measure of inflation jumped to 3.2% from 2.0%, the largest ever jump on record. The ONS said this was in part due to last year’s Eat Out to Help Out scheme pushing prices down. However, Hargreaves Lansdown (LON:HRGV) Personal Finance Analyst Sarah Coles warns that trouble may be ahead.

“Much of this enormous jump is powered by the same alarming imbalance between supply and demand that has seen yawning gaps open up on the supermarket shelves,” Coles said. “It spells trouble for shoppers, savers and the broader economy.”

GBP/USD was higher following the data with focus turning to Friday’s retail sales report and next week’s Bank of England policy meeting.

Major cryptocurrencies edged higher with Bitcoin trading back above $48,000 when the outlook had looked bleak following the recent decline.

“Bitcoin shows incredible resilience at times and it certainly feels like we’re seeing that right now,” writes OANDA Senior Markets Analyst Craig Erlam in an email.


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MARKET WRAP: FTSE 100 edges lower, UK CPI jumps, oil surges

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