Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

FTSE 100 New Post-Pandemic High, US Inflation Reading Ahead

By Neil WilsonMarket OverviewAug 11, 2021 09:48
uk.investing.com/analysis/ftse-100-new-postpandemic-high-us-inflation-reading-ahead-200492649
FTSE 100 New Post-Pandemic High, US Inflation Reading Ahead
By Neil Wilson   |  Aug 11, 2021 09:48
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

European stock markets made early gains as risk remains bid, taking a positive cue from a record high on Wall Street for both the Dow Jones industrial average and the S&P 500, though the Nasdaq closed down 0.5% as yields rose, weighing on big tech, and the passing of the $1tn US infrastructure bill boosted cyclicals. Higher yields boosted the big banks, while a rebound in oil prices lent further support to energy stocks. Caterpillar (NYSE:CAT) led the advance on the Dow, benefitting from the infrastructure deal. Pfizer (NYSE:PFE) shares rallied 4% to a new record, whilst Moderna (NASDAQ:MRNA) handed back some of Monday’s spectacular gains with a decline of more than 5%.  

In Europe, it’s fed through to a strong start led by basic resources as investors seem happy to participate in gently rising equity markets in the absence of any really bad news. The FTSE 100 surpassed its post-pandemic intraday peak at 7,189, breaking 7,192 in early trade this morning. Yesterday Goldman Sachs (NYSE:GS) raised its year-end target on the blue chip index to 7,900. As consistently mentioned here, the FTSE 100 may be old world fare, but it’s still undervalued and unlike most peers has failed to hit all-time highs in the wake of the pandemic. The reflation trade which did so well at the end of last year and start of 2021 has taken a bit of hit lately, but it looks to be back on going into the rest of the year. As far the FTSE 100 is concerned, we need to wait and see whether this area around 7200 is once again the top of the range or if there is a clean push higher which may bring the Feb ‘20 swing highs around 7,500 back into play. Asian shares were not so positive as rising cases of the Delta variant weigh on sentiment.

Taper talk: Chicago Fed’s Evans thinks “we are well on our way” to meet tapering requirements “later this year”, but he stressed again that the rise in prices in temporary and that the central bank ought to stick to its guns on achieving maximum employment. US 10yr yields have risen back to 1.37%, the highest since July 14th. All eyes are on today’s US CPI reading. The month-on-month reading is forecast to slow to +0.4% from +0.9% in June, while core is seen at +0.4% vs +0.9% in June. Lots of chatter about tapering and the strong US data is helping to boost US yields and the USD.

Coinbase (NASDAQ:COIN) reported $2bn in quarterly revenues, almost double CME (NASDAQ:CME) and ICE (NYSE:ICE), and up more 1,000% from a year before as it benefitted from gyrations in cryptocurrency markets. Net income soared to $1.6bn. Retail trading activity was strong, with 8.8m monthly active users, up 44% year-on-year. 

Vectura's (LON:VEC) future won’t be decided by an auction after all, as Carlyle says it won’t revise its 155p-per-share offer. Philip Morris (NYSE:PM) has until Aug 12th to submit its own revised offer, which currently stands at 165p. There is little point in Carlyle getting involved in a street fight here. The group is clearly betting that by sticking to its guns at 155p it will win the board and shareholders over based largely on it not being a tobacco giant. There are clearly lots of concerns about PMI and with the board facing some criticism and many shareholders not keen to see it go ‘up in smoke’, Carlyle looks to have the edge. Shares trade around 163p, down from the 173p yesterday as the prospect of a bidding war recede. 

Deliveroo's (LON:ROO) half-year report showed the pandemic-era trends are still strong. Gross transaction value (GTV) rose 102% to £3.39bn, though growth slowed from +131% in Q1 to +81% in Q2 as the tough comparison with the second quarter of last year was felt. Revenues were up 82% to £922.5 million, primarily due to increase in GTV. Gross profits rose 75% to £263.9m, but margins fell to 7.8% from 8.8% due to investments in growth, leaving Roo with an adjusted net ebitda loss of £27m. Nevertheless, the strong sales performance means it felt able to reiterate the upgraded full year guidance provided in the Q2 2021 trading update in July, which forecasts GTV growth of 50-60% vs the previous 30-40%. Full year gross profit margin is seen in the lower half of the range of 7.5-8.0%, which reflects ongoing investment in growth. Shares fell more than 1.5% in early trade, but need to factor in the pop from the Deliver Hero gains earlier this week; shares up 8% in the last week and more than 16% in the last month. 

Elsewhere, the dollar remains well bid and EURUSD is testing the lows of the year at 1.17. A breach here may see the stops out and a quick decline in price. Note the bearish MACD crossover on the daily. Next major support is at the Nov double bottom around 1.1616.

EUR/USD Daily Chart
EUR/USD Daily Chart

The dollar index showing renewed desire to take on the YTD high from late March with a clean break of 93. Again, note the bullish MACD crossover.

Dollar Index Daily Chart
Dollar Index Daily Chart

Gold treads water around $1,730, below the medium-term trend support (pink line) ahead of the CPI print today. Real rates remain supportive, with 10yr TIPS at –1.04, though the deeply negative territory has not been such succour for the metal in recent days, having come off –1.19% on Aug 3rd. Bearish MACD still in charge but turn in the 14-day RSI needs watching. If gold cracks again then the big level is the YTD low at $1,676.

Gold Daily Chart
Gold Daily Chart

FTSE 100 New Post-Pandemic High, US Inflation Reading Ahead
 

Related Articles

FTSE 100 New Post-Pandemic High, US Inflation Reading Ahead

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and ETX Capital accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.
Continue with Google
or
Sign up with Email