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MARKET WRAP: FTSE outperforms, USD strong after data, cryptos lower

EconomyNov 24, 2021 16:32
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Key Points

  • FTSE 100 closing price of 7,288.2 (+0.3%)
  • Gambling companies lower
  • Britvic pops higher
  • USD higher following US data dump
  • Oil choppy after SPR release; OPEC in focus
  • Cryptos weak with focus on India

By Samuel Indyk – The FTSE 100 outperformed its peers in Europe on Wednesday as the threat of further COVID lockdowns and an economic slowdown in Europe weighed on local bourses. Germany’s DAX declined, despite political parties agreeing to a coalition deal to form a government, as business sentiment declined in November.

Within the UK, gambling companies underperformed after a group of MPs requested the government take “bold” measures to curb problem gambling. Entain (LON:ENT), Flutter Entertainment PLC (LON:FLTRF), and 888 Holdings (LON:888) all dropped with measures touted including a £2 maximum bet online and a monthly limit of £100.

Shares in fizzy drinks maker Britvic (LON:BVIC) popped higher after recording a 6.6% rise in revenue in the last financial year. The company also upped its dividend by 12%.

“The company struck a confident tone on managing the cost pressures and supply chain issues which are afflicting businesses across the globe and it was notable to see a significant hike in the dividend, albeit from last year’s depressed level,” said AJ Bell Investment Director Russ Mould. “Investors are likely to find it refreshing if it can deliver further progress on revenue, profit and margins in 2022 as promised.”

The USD was strong following a raft of relatively upbeat data from the US, the most eye-catching being the weekly initial jobless claims figures. Individuals filing for unemployment claims for the first time dropped to 199,000 in the latest week, the lowest level since 1969.

The Fed’s preferred method of inflation, the Core PCE Price Index, rose to 4.1% YoY in October, in line with expectations. That’s the highest level for the measure since 1991. Including food and energy, the PCE Price Index rose to its highest level since 1990.

The strong USD meant GBP/USD traded at its lowest level since December last year, when the UK looked as though it might have been heading for a ‘no-deal’ Brexit. EUR/USD dropped below 1.1200 for the first time since July 2020.

WTI and Brent crude futures were both trading choppy, the day after the US and allies announced a release of oil from the strategic reserves. The Wall Street Journal reported that Saudi Arabia and Russia were now considering a move to pause planned production increases, following the move by the US. Reuters reported that OPEC was not discussing pausing oil output increases. The group meets next week to decide on January’s production level.

The weekly inventory data from the US EIA showed stockpiles unexpectedly rose in the latest week. Crude stocks increased by 1.017 million barrels versus expectations for a drawdown of 481,000 barrels.

Cryptocurrencies were again struggling for momentum with Bitcoin stabilising after finding support above $55,000.

“The move below $58,000 was a blow and it could fall further still in the near term,” said OANDA Senior Market Analyst Craig Erlam. “It's hard to imagine the correction being too severe though given the momentum we're seeing in the space at the moment and the excitement it's generating.”


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MARKET WRAP: FTSE outperforms, USD strong after data, cryptos lower

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