MARKET WRAP: FTSE edges lower, GBP slips, oil falls, Ethereum hits record

imageEconomy10 hours ago (Nov 02, 2021 16:35)

Key Points

  • FTSE 100 closing price of 7,273.35, -0.2%
  • BP , Flutter Entertainment drop after earnings
  • GBP/USD falls to a 3-week low
  • Oil drops ahead of inventory data, OPEC+ meeting
  • Bitcoin heads back towards $65K, Ethereum breaches $4,500

By Samuel Indyk – The FTSE 100 ended lower on Tuesday as a number of heavyweight companies declined following trading updates. Oil major BP (LON:BP), banking giant Standard Chartered (LON:STAN) and bookmaker Flutter Entertainment (LON:FLTRF) all fell after results.

Shares in BP declined despite the company achieving a 44% increase in revenue in the third quarter and announcing plans for a new $1.25 billion share repurchase programme.

“BP’s third quarter results show that oil & gas remains a lucrative business,” said Hargreaves Lansdown (LON:HRGV) Equity Analyst Nicholas Hyett. “High prices have driven strong year-on-year growth in profits, and that’s being used to fund a generous $1.25bn share buyback. However, you can reasonably question whether that generosity is justified. While still low by historic standards gearing rose modestly in the quarter, and the group only reported surplus cash generation of $933 million. Unless the fourth quarter turns out to be even better than this it’s likely gearing will rise again.”

Flutter Entertainment shares declined after the bookmaker cut its guidance for EBITDA following a string of unfavourable sporting results in October, including Liverpool beating Manchester United in the English Premier League and Tyson Fury’s heavyweight boxing victory over Deontay Wilder.

“Ultimately, Flutter’s story remains focused on the US where there are plenty of growth opportunities,” said AJ Bell Investment Director Russ Mould. “Competition is growing in this space, but Flutter is holding its own in the market. FanDuel is seeing encouraging staking levels, which bodes well if Flutter decides to spin off the business in the future, such is the speculation.”

GBP/USD dropped to its lowest level since 13th October ahead of the Fed and Bank of England monetary policy announcements on Wednesday and Thursday, respectively. The fall in GBP comes amid the uncertainty surrounding the BoE decision, with economists and market pricing split on what the central bank might do. Governor Andrew Bailey was vocal prior to the blackout period, suggesting that the BoE would need to act to temper inflation but markets are unsure whether a rate hike will be forthcoming at this meeting. The Fed is likely to begin tapering its asset purchase programme with focus on the size and speed of the taper.

WTI and Brent crude futures were both trading lower ahead of the API’s US oil inventory data after-market today. The increasing inventories last week weighed on the crude complex after both benchamarks had recently hit multiyear highs. Meanwhile, focus is also on Thursday’s meeting of OPEC+ where the group is expected to continue with their current easing plan to increase production by another 400,000 barrels per day from next month.

Major cryptocurrencies were mostly higher with Ethereum trading above $4,500 for the first time. Bitcoin has also made another run up towards its all-time high and is trading in close proximity to $64,000.

“How it [Bitcoin] trades around here could tell us whether we’re seeing a corrective rally as part of a deeper pullback in the Bitcoin price, or another run for record highs,” writes OANDA Senior Market Analyst Craig Erlam. “Whichever it is, I don’t think it will be long before we’re seeing the latter as there’s so much hype in the space right now.”


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MARKET WRAP: FTSE edges lower, GBP slips, oil falls, Ethereum hits record

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