MARKET WRAP: FTSE edges lower, GBP regains some lost ground, Nat Gas higher

imageEconomy1 hour ago (Sep 30, 2021 16:37)

© Reuters.

Key Points

  • FTSE 100 closing price of 7080.5, -0.4%
  • Blue-chip index records quarterly gain
  • UK GDP revision adds to BoE hike expectations
  • GBP higher following data
  • Oil resumes rally
  • Nat Gas higher after inventory data
  • Bitcoin higher, major cryptocurrencies in tight ranges

By Samuel Indyk – The FTSE 100 ended the month in negative territory but still managed to end the quarter higher, despite some of the recent selling pressure.

For the month, the FTSE 100 ended lower by 0.2% but for the third quarter, the index gained 0.8%. Rolls-Royce (LON:RR) was one of the best performing stocks in September, rising over 20%, as international travel restrictions between Europe and the US were eased and the company announced it had reached its disposal target.

Energy companies Royal Dutch Shell (LON:RDSa) and BP (LON:BP) also performed well in the month as oil prices surged with Brent touching $80/barrel earlier this week.

Both WTI and Brent had pared back earlier in the session but found some support towards the European close with both benchmarks turning positive as WTI climbed back above $75/barrel.

US Natural Gas Futures were higher after a choppy week so far. The latest storage report from the EIA showed stocks increased by 88 Bcf in the latest week but still remain 575 Bcf less than the same week last year and 213 Bcf below the five-year average. The squeeze in European natural gas prices has continued with wholesale prices hitting new highs across the continent.

On the data front, China’s manufacturing PMI dropped to 49.6. This is the first time the measure has dropped below the expansionary 50 threshold since February 2020. US initial jobless claims unexpectedly increased to 362,000 last week, the third consecutive increase in applications for unemployment benefits.

Meanwhile, the UK’s Office for National Statistics (ONS) revised up its estimate for second quarter GDP to 5.5% from 4.8%. The ONS cited health services and the arts as the reason for the revision upwards.

“GDP is now just 3.3% shy of pre-pandemic levels, and far healthier than the near 20% decline seen as the initial lockdown was introduced in March 2020,” writes interactive investor Head of Markets Richard Hunter.

The GDP revision helped GBP with GBP/USD bouncing slightly following the heavy 2-day decline. After dropping as much as 300 pips from the high on Tuesday to Wednesday’s low, the pair has staged a rebound and is looking to retest 1.3500 to the upside.

Cryptocurrencies were steady with Bitcoin eking out gains and trading above $43,000.

“Bitcoin continues to consolidate between $40,000 and $45,000 as bullish traders refuse to concede defeat no matter how short-lived these rallies are becoming,” writes OANDA Senior Market Analyst Craig Erlam.

“Of course, every failure to break $40,000 casts further doubt over its ability to do so and bulls may be encouraged by the resilience displayed so far.

“And a break of $45,000 would certainly give them more confidence, should that occur before $40,000 falls.”


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MARKET WRAP: FTSE edges lower, GBP regains some lost ground, Nat Gas higher

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