MARKET WRAP: FTSE drops, GBP higher, Bitcoin surges

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imageEconomy2 hours ago (Oct 01, 2021 16:35)

© Reuters.

  • FTSE 100 closing price of 7,028, -0.8%
  • AO World drags other retailers with it
  • GBP higher, USD softens
  • Oil steady ahead of OPEC meeting
  • Bitcoin surges as technical hurdles jumped

By Samuel Indyk

Investing.com – The FTSE 100 began the month and quarter on the back foot, briefly dropping below 7,000 before staging a slight rebound amid broad based stock weakness. There was some brief respite after pharma giant Merck (NYSE:MRK) announced their antiviral pill halves the risk of hospitalisation and death in Covid patients. However, the gains were short-lived and US equity markets also turned lower.

Domestically, AO World (LON:AO) was in focus after the company provided a trading update pre-market. Shares in the online electrical retailer declined over 20% as the firm cited “challenging market dynamics” for lower than expected volumes. The disappointing trading picture also weighed on competitor Dixons Carphone (LON:CURY) and other pandemic-busting retailers, including B&M (LON:BMEB) and Dunelm (LON:DNLM).

“It’s astonishing how fortunes can change in the matter of a year,” said AJ Bell Investment Director Russ Mould. “Having cracked the UK, winning overseas is a crucial part of AO’s strategy and it cannot afford to have any setbacks on this front.”

GBP continued to regain some lost ground but GBP/USD was still heading for a weekly loss for the fourth consecutive week. The global risk-off tone has not helped GBP in recent weeks while supply-chain issues impacting supermarket shelves and causing queues at petrol pumps are also weighing on the currency.

WTI and Brent crude futures were relatively steady as focus turns to next week’s OPEC+ meeting. Crude had been lower at the start of the day amid reports that the cartel could increase production by more than the 400,000 barrels per day pencilled in.

US Natural Gas Futures declined around 3% in what has been a notably volatile week where the front month contract traded above $6/mmbtu for the first time since February 2014.

Cryptocurrencies were the big movers of the day with Bitcoin surging 10% in a matter of minutes after breaking above $45,000, then the 200-day moving average at $45,180 and then the 50-day moving average at $46,610. Bitcoin peaked around $47,800 before paring gains slightly with $48,000 the next resistance level.

“It [Bitcoin] had experienced a lot of resistance around $45,000 after it had been key support for most of August and early September,” said OANDA Senior Market Analyst Craig Erlam.

“A break back above here was clearly a big moment and was immediately the catalyst for a surge towards $47,000.

“The battle is not won yet though, with it running into resistance today around the 61.8% retracement of the September highs to lows.

“A move above here and $50,000 is suddenly looking very vulnerable.”

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MARKET WRAP: FTSE drops, GBP higher, Bitcoin surges

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