MARKET WRAP: FTSE slips, GBP/USD reclaims 1.34, Oil declines

imageEconomy12 hours ago (Nov 12, 2021 16:45)

© Reuters

Key Points

  • AstraZeneca (NASDAQ:AZN) weighs on FTSE
  • Avon Protection declines after body armour setbacks
  • GBP/USD edges back above 1.3400
  • WTI briefly slides below $80/barrel
  • Cryptos edge lower ahead of Bitcoin update

By Samuel Indyk – The FTSE 100 ended the session lower as a decline in AstraZeneca (LON:AZN) shares weighed on the blue-chip index.

Shares in the COVID vaccine manufacturer declined after the company reported its third quarter results. Sales increased 48% YoY in Q3 to $9.9 billion which partly reflected the acquisition of Alexion (NASDAQ:ALXN), however, soaring costs have squeezed margins which pushed shares lower.

“The acquisition of Alexion means Astra’s sales numbers have soared,” writes Hargreaves Lansdown (LON:HRGV) Equity Analyst Nicholas Hyett. “But impairments, additional operating costs post-acquisition, new drug launches and the fact the groups still makes no profit on vaccine sales all mean profit margins are down substantially.”

Avon Protection (LON:AVON) shares halved after the company said it was initiating a strategic review of its body armour business, following failures in testing of certain products that will significantly delay the approval timetable.

“The body armour issues are now so serious the company has launched a strategic review of this part of the business, signalling it could even be sold off entirely, while its full-year results for the year to 30 September have been delayed and are likely to see significant impairments,” said AJ Bell Investment Director Russ Mould. “Worryingly for management’s credibility, Avon had already updated on its full-year performance in a trading update last month, post the period end. For the current financial year, it is a case of wait and see, but it’s hard to be too encouraged.”

GBP/USD edged back above 1.3400 and reclaimed some lost ground in the wake of last week’s Bank of England decision and Thursday’s soft GDP figures. Positive discussions between the EU and UK on the Northern Ireland protocol appeared to help the pound.

“I acknowledge and welcome the change in tone of discussion with David Frost today, and I hope this will lead to tangible results for the people in Northern Ireland,” EU Chief Negotiator Maros Sefcovic said, following discussions between the two parties.

WTI and Brent Oil Futures continued to edge lower, the former briefly dropping below $80/barrel for the first time since November 5th. The stronger USD continues to weigh on crude price, while there remains speculation that the US might release oil from its Strategic Petroleum Reserve. Looking ahead, focus will be on the Baker Hughes US Rig Count at 18:00GMT for signs that US oil producers are planning to ramp up production.

Major cryptocurrencies were mostly lower with Bitcoin dropping towards $63,000 ahead of the Taproot upgrade which could take place this weekend. The Taproot update is expected to improve the network’s privacy.


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MARKET WRAP: FTSE slips, GBP/USD reclaims 1.34, Oil declines

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