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FTSE reclaims 7000, GBP bounces, oil higher, Bitcoin falls

EconomyJun 21, 2021 16:34
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Key Points

  • FTSE 100 closing price of , %
  • Morrison jumps after takeover bid
  • GBP bounces after sell-off last week
  • Oil higher after Iran election, nuclear talks
  • Cryptos fall on China crackdown, Bitcoin briefly trades below $32,000

By Samuel Indyk – The UK’s FTSE 100 finished Monday’s trading session in the green despite hitting its lowest level in a month early in the session. Other European stock indices showed similar price action but regained some lost ground as growth stocks traded higher.

The move in UK shares was helped by a rally in supermarket stocks, in particular Morrisons (LON:MRW). The supermarket company gained over 34% after receiving and rejecting an approach from Clayton Dubilier & Rice that would have valued the company at £5.52bln.

Morrisons said the approach significantly undervalued the company and there is suggestion that other groups may now enter the fray. Other private equity groups have been touted but more interesting may be an approach from Amazon (NASDAQ:AMZN), who already has a partnership deal with the grocer.

Other supermarket chains rallied in sympathy with Morrisons with Sainsbury 's (LON:SBRY) up over 4% and Tesco (LON:TSCO) higher by 1.4%. Food delivery company Ocado (LON:OCDO) also saw its shares jump but this was also helped by an upgrade from Morgan Stanley (NYSE:MS) to overweight from equalweight.

Another UK company subject to takeover approach is Senior PLC (LON:SNR). Private equity firm Lone Star increased its offer for the FTSE 250 aircraft parts supplier to 200 pence per share which propelled shares over 8.5% higher.

In FX markets, GBP regained some lost ground after selling off last week as the recovery was thrown into doubt amid an increase in Covid infections. However, Prime Minister Johnson sounded slightly more upbeat on Monday, saying data was looking good for lifting curbs on July 19th. Separately, many have played down the delay, saying ultimately it is just a small bump in the road on the way to economic recovery.

After having its best week since April last week, EUR/GBP dropped back below 0.8600 while GBP/USD rallied over a point off the lows to trade back above 1.3900.

WTI and Brent crude futures were trading higher as the demand picture is continuing to show signs of improvement while expectations of an immediate increase in Iranian supply have somewhat diminished as nuclear talks have been put on hold.

Iranian representatives requested a ten-day delay following the Iranian election which saw hard-line candidate Ebrahim Raisi elected as President, however, some have played down the influence the new President will have on deciding whether to renew the deal.

“Delegations from the West and Iran assert that the outcome of the election is unlikely to change Iran’s stance as the nation’s Supreme Leader Ali Khamenei will ultimately decide on Iran’s willingness to comply with the treaty,” notes StoneX Energy Economics Analyst Kevin Solomon.

Bitcoin and other major cryptocurrencies all fell as the Chinese crackdown on the industry gathered pace over the weekend. On Friday, the province of Sichuan ordered many of the largest local mines to stop operating, following similar moves from Qinghai and Xinjiang in recent weeks.

Separately, over the weekend a ‘Death Cross’ was formed in Bitcoin where the 50DMA crosses below the 200DMA. This is often seen as a major sell signal among technical analysts, although the last time this occurred, the trend reversed and the 50DMA crossed back above the 200DMA within two months.


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FTSE reclaims 7000, GBP bounces, oil higher, Bitcoin falls

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