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MARKET WRAP: FTSE falls, US CPI softer than forecast, oil higher

Published 14/09/2021, 16:31
Updated 14/09/2021, 16:35
© Reuters.

Key Points

  • FTSE 100 closing price of 7,035.4, -0.5%
  • Miners weigh on FTSE
  • JD Sports rallies
  • UK labour market recovery continues
  • US consumer prices increase by less than forecast
  • Oil maintains upward trajectory
  • Gold reclaims $1800
  • Cryptocurrencies mostly higher

By Samuel Indyk

Investing.com – The FTSE 100 declined on Tuesday as a number of mining shares weighed on the blue-chip index following a note from Barclays (LON:BARC) on the sector.

Rio Tinto (LON:RIO), Anglo American (LON:AAL) and BHP Group (LON:BHPB) all had their price targets cut as Barclays downgraded the European mining sector to neutral on China’s rapid steel production cuts. However, Glencore (LON:GLEN) was maintained at overweight with Barclays analysts saying they had an attractive valuation.

JD Sports (LON:JD) shares rallied after the sports and leisurewear retailer reported record first half profit. The company now forecasts full year profit before tax of at least £750 million.

“Demand for trainers and the trend for athleisure wear shows little sign of going out of fashion,” writes Hargreaves Lansdown (LON:HRGV) Senior Investment and Markets Analyst Susannah Streeter. “The sports leisure market in the US is huge and here JD Sports is stepping up the pace of sales, which will be key to future growth prospects.”

On the data front, focus in the UK was on the latest labour market report for signs that the recovery is continuing. The Office for National Statistics (ONS) said that employee numbers returned to pre-Covid levels in August as 241,000 payrolled jobs were added. Vacancies hit a record high above 1 million.

“Beyond the near term, the sharp rise in the level of vacancies suggests a likelihood of sustained increases in employment in the coming months,” said analysts at Lloyds (LON:LLOY) bank in an emailed note. “The strong pick up in demand for labour corroborates evidence from a number of survey reports […] which show that hiring activity has held firm throughout the summer months.”

In the US, focus was on CPI which increased at a below forecast 0.3% in August, according to the Labor Department. The lower than expected CPI figures come ahead of next week’s Fed meeting and the chances of tapering to begin next week now seem very unlikely.

GBP/USD was higher in the wake of the two data releases with the pair trading above 1.39 for the first time since 6th August. EUR/GBP dropped to a three-week low following the UK data.

WTI and Brent crude futures were again trading higher although gains were more modest compared to recent days. The latest monthly oil market report from IEA showed the agency expects oil demand to pick up towards the end of the year. Brent had earlier touched its highest level in six weeks above $74/barrel. The impact of Storm Nicholas on production in the Gulf of Mexico has also supported prices.

“The Category One Hurricane prompted evacuations from oil platforms off the Gulf coast yesterday, and we should see the extent to which it has further reduced oil production in the Gulf in the coming days or at the very least further delayed the recovery from Hurricane Ida,” said StoneX Energy Analyst Kevin Solomon.

Cryptocurrencies were trading mostly higher in a quieter day after the volatility seen on Monday, prompted by the fake Walmart (NYSE:WMT)/Litecoin press release.

Bitcoin rebounded back above $46,000 and Ethereum also traded higher amid little news.

“From a technical perspective, little has changed on the Bitcoin front,” writes OANDA Senior Market Analysts Craig Erlam. “A significant break of $44,000 could see a sizeable correction follow, one that has been building for a number of weeks.”

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