Key Points
- FTSE 100 closing price of 7014.28, -1.95%
- Blue chip index has worst day since May 11th
- GBP falls as retail sales miss estimates
- USD continues upward trajectory
- Oil steady as WTI holds $70
- Cryptos fall, Bitcoin hits 5-day low
By Samuel Indyk
Investing.com – The FTSE 100 finished the week with its worst day since 11th May as equity markets around the world came under selling pressure. There was widespread selling across the sectors as markets continue to react to Wednesday’s Federal Reserve interest rate decision. The central bank brought forward their view for the first interest rate hike, potentially paving the way for a tapering of asset purchases sooner than some had expected.
Car dealership Inchcape (LON:INCH) was one of few companies that managed to avoid the selloff after the company lifted their profit forecast in trading update pre-market. However, they were still relatively cautious about the outlook given the global semi-conductor shortage which is expected to impact the supply of autos over the coming year.
GBP was weak following soft retail sales data. The Office for National Statistics said retail sales declined 1.4% in May, although that followed a stellar April and much of the fall was due to a decline in food sales as people began to eat out when hospitality reopened.
GBP/USD dropped to its lowest level since 3rd May in the wake of the data and as the USD continued its upward trajectory in the wake of the hawkish Fed decision.
WTI and Brent crude futures rallied despite the stronger USD as the narrative around an improving demand picture remains intact. Further supporting prices was a report from OPEC officials that suggested US supply will remain limited in 2021 despite rising oil prices.
In the cryptocurrency space, Bitcoin fell to its lowest level in five days as much of the gains from the early part of the week have been retraced. The rally started as Elon Musk said Tesla (NASDAQ:TSLA) would resume accepting Bitcoin when there is confirmation of clean energy usage by miners.
However, on Thursday, Musk questioned the Kraken CEO Jesse Powell, after he said Bitcoin was “greener” than critics say. Responding on Twitter, Musk said: “Based on what data?”
Over the weekend, focus will be on whether the dreaded ‘death cross’ forms, when the 50DMA ($43,300) crosses below the 200DMA ($42,900). In technical circles, when a death cross is formed it is a sell signal as momentum in the underlying asset fades.
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