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MARKET WRAP: FTSE falls, USD strengthens, Bitcoin drops below $40K

© Reuters.

Key Points

FTSE 100 closing price of 7,444.66 (-0.54%)
Homebuilders weigh on FTSE
Nasdaq 100 hits lowest level since 18th October
USD stronger, GBP mixed
Oil slips as Kazakh production resumes
Bitcoin briefly drops below $40,000

By Samuel Indyk – The FTSE 100 started the week on the back foot amid a decline in UK homebuilders and as global equity markets continued their recent decline. The Nasdaq 100 dropped to its lowest level since 18th October.

Homebuilders were weak after the UK government announced plans to make the builders pay for the removal of unsafe cladding from some buildings. The government has set a deadline of early March for the industry to fund a plan of action, which is expected to cost around £4 billion. Persimmon (LON:PSN), Barratt Developments (LON:BDEV), Berkeley and Taylor Wimpey (LON:TW) were some of the worst performing stocks in the blue-chip index.

In FX markets, the USD was strong ahead of this week’s CPI data from the US. The data, released on Wednesday, is expected to show headline CPI above 7% which would be a forty-year high. Inflation at that level could cement boost the chances of a rate hike from the Federal Reserve at its March meeting.

EUR/GBP dropped to its lowest level since February 2020 as the contrasting rate expectations from the Bank of England and European Central Bank continues to weigh on the cross.

WTI and Brent crude futures were both trading lower as disruptions that looked like they could impact oil supply last week have started to ease. In Kazakhstan, the Tengiz oil field is starting to gradually increase production after the unrest last week led to a reduction in output.

Meanwhile in Libya, repairs have been completed on a major pipeline in the east of the country, however, reports suggested that the OPEC member was pumping around 900,000 barrels per day currently, around 350,000 barrels per day less than December.

Cryptocurrencies were again under pressure with Bitcoin dropping below $40,000 for the first time since 21st September and Ethereum falling below $3,000 for the first time since 1st October.

Last week’s minutes from December’s Fed meeting and Friday’s US labour market report have weighed on cryptocurrencies at the start of the year with Bitcoin declining when risk sentiment is weak and rising when risk sentiment improves.


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MARKET WRAP: FTSE falls, USD strengthens, Bitcoin drops below $40K

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