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FTSE 100 slips as banks tumble and pound rallies

News MarketsFeb 18, 2021 16:31
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© Reuters.

By Samuel Indyk

Investing.com – The FTSE 100 fell to its lowest level since Monday as banks tumbled and GBP rallied. A surge in US initial jobless claims didn’t help, with 861,000 people filing for unemployment benefit for the first time in the latest week, more than the 765,000 expected.

Barclays (LON:BARC) was one of the worst performers in the blue-chip index, falling almost 6% after the company reported earnings pre-market. Although the company said they would reinstate their dividend and buy back up to £700mln worth of shares, the stock underperformed due to their cautious outlook which was full of warnings surrounding Covid.

Other large banks, including Lloyds (LON:LLOY) and NatWest Group PLC (LON:NWG), fell in sympathy. The FT also reported that Natwest is planning on withdrawing from the Republic of Ireland and focusing operations in its core UK market.

Smith & Nephew PLC (LON:SN) shares were also weak after the company reported a fall in profits due to the Covid pandemic. Although it would be expected that healthcare names should perform well in a health crisis, the company has struggled to make revenue due to the large-scale cancellation of other procedures.

Commodities

WTI and Brent crude futures were relatively flat as markets come to terms with lost oil production in Texas and a potential boost to production from Saudi Arabia. Thursday’s delayed DoE inventory data saw a large draw down in crude inventories which lifted WTI back above $61/barrel.

Amid the broad-based commodity strength seen recently, Lumber has gone under the radar, but the building material hit an all-time high above $1000 on Thursday. Year-to-date Lumber is up over 30%.

The commodity that is missing out on the rally is gold. The yellow metal dropped to a seven-month low on Thursday although has since bounced amid weakness in equities.

Currencies

The pound has staged another strong rally but GBP/USD found resistance ahead of 1.4000 and has since dropped back towards 1.3950. EUR/GBP dropped below 0.8700 to its lowest level since March last year as markets continue to believe the pace of the vaccine rollout in the UK will see the economy perform better than the Eurozone in the coming months.

Cryptocurrencies

Bitcoin has been relatively stable throughout the day, stabilising above $51,000. As more and more companies begin accepting and discussing bitcoin, the credibility of it as an asset continues to grow, even if some still believe it has no real use.

FTSE 100 slips as banks tumble and pound rallies
 

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Comments (1)
Peter Lewis
Petelewis1994942 Feb 18, 2021 17:37
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Dow Jones Industrial Average tanked 271 points, while the S&P 500 lost around 36 points. 3.55pm: Leading shares dragged down by US data For the second day running, the UK market was drifting fairly listlessly until the latest US data put a spanner in the works. On Wednesday it was much stronger than expected US retail sales, which prompted worries about inflationary pressures and upset investors. This time it is worse than expected jobs figures, with the number of people claiming unemployment benefits last week coming in higher than forecast. There were also weaker housing figures, with housing starts falling 6% in January. The Dow Jones Industrial Average has fallen 220.97 points or 0.7% to 31,392.05 on the news. So a rise in mining shares was not enough to prevent the FTSE 100 sliding well into the red. Things were not helped by a drop in banking shares following disappointment at the results from Barclays PLC (LON.BARC), down 9.1p or 5.9% at 145.26p.
 
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