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MARKET WRAP: FTSE finishes higher, crude surges to multiyear highs

EconomyOct 25, 2021 16:22
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Key Points

  • FTSE 100 closing price of 7,223, +0.3%
  • Energy, basic materials boost FTSE
  • HSBC higher after earnings
  • Oil rallies to multiyear highs on tight supply
  • GBP edges higher
  • Most major cryptos higher, Shiba Inu underperforms following Musk tweets

By Samuel Indyk – The FTSE 100 finished higher on Monday as a rally in energy and basic materials names again lifted the index.

Royal Dutch Shell (LON:RDSa) and BP (LON:BP) were two of the best performing stocks in the blue-chip index as oil prices rallied to multiyear highs. WTI crude futures traded above $85/barrel for the first time since October 2014, although Brent crude futures struggled to break above the multiyear highs hit last week. The tight supply picture continues to support prices with recent reports suggesting that the OPEC+ group will maintain their cautious approach to lifting output.

“Demand for energy is rising yet supply growth does not seem to be keeping pace,” said AJ Bell Investment Director Russ Mould. “The last time Brent crude oil traded at $86 a barrel, in November 2010, over 3,000 oil rigs were active worldwide but only half that figure is drilling and producing now, according to data from Baker Hughes.”

HSBC (LON:HSBA) shares were trading higher after the company reported a surge in profit in the third quarter and announced a new $2 billion share repurchase programme.

“Pre-tax profits have been buoyed by a huge swing in expected credit losses – with a chunky charge this time last year, turning into a release that buffer this quarter,” said Hargreaves Lansdown (LON:HRGV) Equity Analyst Sophie Lund-Yates. “All in, the picture is looking healthier for HSBC, but while interest rates remain on the floor, the group will continue to be held back.”

On interest rates, the Bank of England’s Silvana Tenreyro stuck to her generally dovish tone, saying she needed additional time to judge the impact of the end of the government’s furlough scheme on the labour market before deciding whether to raise interest rates. The comments suggest that Tenreyro would not be in a rush to hike interest rates when the MPC meets next month.

Despite the comments, GBP was trading higher against both the EUR and USD as markets are still pricing in at least one rate hike by year end. Further supporting the currency was the latest CFTC Commitment of Traders report from Friday which showed speculators had switched to a net long GBP position. GBP/USD was higher but struggled to move above 1.3800 ahead of Wednesday’s Autumn Budget Statement from the UK.

Cryptocurrencies were mostly higher with Bitcoin finding support ahead of $60,000 and moving back into positive territory amid a barrage of tweets from Tesla (NASDAQ:TSLA) CEO Elon Musk.

Musk reiterated he owns Bitcoin, Ethereum, and Dogecoin, while also referring to the latter as “the people’s crypto”. However, one cryptocurrency that is underperforming is another dog-based coin. Shiba Inu fell after Musk said he didn’t own the cryptocurrency, however, the coin remains almost 450% higher month-to-date.


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MARKET WRAP: FTSE finishes higher, crude surges to multiyear highs

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