MARKET WRAP: FTSE higher, GBP sinks, Oil falls after inventory build

© Reuters

Key Points

• FTSE 100 closing price of 7,109.17, +1.2%
• AstraZeneca (NASDAQ:AZN) to buy Caelum
• Next shares rally on guidance boost
• GBP slips as USD hits highest since November 2020
• Oil declines after surprise inventory build
• Major cryptocurrencies steady

By Samuel Indyk

Investing.com – The FTSE 100 finished higher on Wednesday, retracing the losses from Tuesday’s sell-off amid a jump in financials and as AstraZeneca (LON:AZN) and Next PLC (LON:NXT) rallied following M&A and trading updates, respectively.

AstraZeneca announced that it would be buying Caelum Biosciences in a deal worth up to $500 million, under its Alexion (NASDAQ:ALXN) division. Alexion will pay $150 million up front, plus future payments of up to $350 million to buy Caelum, who is currently developing a drug to treat AL amyloidosis.

Next shares were higher after the company reported a strong start to the second half of the year, with full price sales up 20% on 2019. The group upgraded its guidance and now expects full price sales to rise 10% for the full year, while also upping profit guidance.

“Next is the golden girl of the high street,” said Hargreaves Lansdown (LON:HRGV) equity analyst Sophie Lund-Yates. “Its well-groomed and ever-growing online business means it has brushed off the worst of the woes brought on by lockdown.”

GBP slipped for a second day with GBP/USD dropping to its lowest level since December last year, when the uncertainty surrounding a potential no-deal Brexit was at its peak. It’s difficult to pin the recent weakness on one factor but the petrol pump queues are not helping matters, whether that is a psychological effect or fears that the fuel shortages may drag out the economic recovery for longer.

The USD was notably strong, with the US Dollar Index rising to its highest since November last year following last week’s Fed meeting. Focus is turning to the ECB’s Forum on Central Banking where Bank of England Governor Andrew Bailey, Fed Chair Jerome Powell, ECB President Christine Lagarde, and Bank of Japan Governor Haruhiko Kuroda will be sitting on a policy panel at 16:45BST today.

WTI and Brent crude futures both fell after an unexpected rise in US crude oil inventories. Tuesday’s API data was confirmed by the EIA which showed stockpiles increased by 4.578 million barrels in the latest week, versus expectations for a draw of 1.652 million barrels.

Cryptocurrencies were relatively steady with Bitcoin once again finding support around its 100-day moving average near $41,200. However, with just one day left of the month, Bitcoin is on track to have its worst performing month since May’s sell-off and the second-worst month in the last year and a half.

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