MARKET WRAP: FTSE edges lower, ECB on hold, Oil falls, Bitcoin reclaims $60K

imageEconomy15 hours ago (Oct 28, 2021 16:27)

Key Points

  • FTSE 100 closing price of 7,248.5, -0.1%
  • Shell (LON:RDSa) drops after results; Lloyds (LON:LLOY), WPP (LON:WPP) higher
  • EUR higher after ECB, German inflation
  • USD soft after GDP miss
  • Crude declines on Iran nuclear discussions, US inventories
  • Bitcoin reclaims $60,000, Dog-based coins outperform

By Samuel Indyk – The FTSE 100 traded marginally lower as a decline in Shell shares outweighed a rally in WPP and Lloyds.

Shares in the oil giant Shell were lower following a “muddy” set of numbers, according to Hargreaves Lansdown (LON:HRGV) Equity Analyst Nicholas Hyett.

“The rapid swings we’ve seen in oil & gas prices over the last 18 months mean the group has had to take a large writedown in the value of the derivatives it took to out hedge itself against a further price fall,” Hyett said. “However, the underlying numbers, and particularly the all-important cash flow numbers, are looking far more upbeat.”

At the other end of the blue-chip index was WPP. The advertising behemoth upgraded its revenue guidance for the full year after better than expected third quarter results.

Lloyds shares were also higher after the company reported higher profits on release of credit impairments and improved its full year guidance.

“The improving performance within the UK economy, of which Lloyds is often seen as something of a bellwether, has enabled pre-tax profit in the quarter to double to £2 billion from a year before,” said interactive investor Head of Markets Richard Hunter.

On a macro level, focus was on the latest interest rate decision from the ECB. Unsurprisingly, the central bank kept its three main interest rates unchanged and maintained its guidance on QE. In the post-decision press conference, President Christine Lagarde attempted to push back on expectations for a rate hike at some point in 2022. Nevertheless, the EUR rose in the wake of the decision with the ECB being somewhat of an outlier in their view on inflation. German CPI released before the press conference was firmer than forecast.

EUR/USD traded back up towards 1.1700 and was helped by a softer USD following the latest US growth figures. GDP missed expectations in the third quarter, although it wasn’t as bad as it maybe could have been given the well-known supply chain issues. According to ING analysts, Q4 is looking much stronger, and the Dutch bank sees the overall size of the economy overtaking its pre-COVID trend early next year.

WTI and Brent crude futures retreated on expectations that a resumption in talks between Iran and world powers on its nuclear programme could see sanctions eased in the near future. Iran is hoping for a removal of sanctions that were reintroduced by the Trump administration in 2018. Adding to the negative tone was the weekly crude inventory report from Wednesday which showed a large than expected build in stockpiles in the latest week.

Cryptocurrencies had been lower but reversed course as Bitcoin broke back above $60,000. Some were looking at news that El Salvador had “bought the dip”, with the President announcing over Twitter (NYSE:TWTR) that the Central American country had another 420 Bitcoin to its holdings.

Dog-based coins were also in focus with Shiba Inu and Dogecoin rallying. Shiba Inu briefly overtook its meme-based cousin in market cap and is now the 10th largest cryptocurrency.


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MARKET WRAP: FTSE edges lower, ECB on hold, Oil falls, Bitcoin reclaims $60K

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