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MARKET WRAP: FTSE finishes higher, GBP/USD hits highest since 4th Nov

© Reuters.

Key Points

FTSE 100 closing price of 7,491.7 (+0.6%)
Games Workshop slides after trading update
Scottish Mortgage Investment Trust higher after Monday rebound in US tech stocks
GBP stronger against EUR and USD
Crude up as demand recovery set to continue
Bitcoin steadies above $40K

By Samuel Indyk – The FTSE 100 finished higher on Monday amid broad-based gains in European stocks as they played catchup to the gains seen in US stocks at the end of Monday’s trading day.

Scottish Mortgage Investment Trust (LON:SMT) was one of the best performers in the blue-chip index as the fund owns a number of large US tech stocks. On Monday, the Nasdaq 100 ended positive after being lower by around 2.7% when European markets closed and SMIT was playing catch-up following the rebound.

Games Workshop (LON:GAW) was a notable underperformer in the UK after the company reported a drop in profits for the first half of the financial year. AJ Bell Investment Director Russ Mould also notes recent reports of fractures between Games Workshop and its devotees of players due to the launch of a subscription-based service and aggressive protection of its intellectual property.

“While it is understandable that Games Workshop is protective of its IP, it needs to tread carefully,” Mould said. “The value of the company is inextricably linked to fans’ devotion to the Warhammer brand.”

GBP strengthened against both the EUR and USD with EUR/GBP dropping to its lowest level since February 2020 and GBP/USD hitting its highest level since 4th November. The outlook for the Bank of England is continuing to support GBP, with some analysts forecasting another rise in the Bank Rate as early as next month.

Commodity-linked currencies, such as the CAD and NOK, have strengthened amid a rally in oil prices.

Both WTI and Brent crude futures were higher with the demand picture continuing to look rosier than it had done a few weeks ago. When the Omicron variant was spreading rapidly and it was unclear how severe the illness would be from it, there had been fears that countries may introduce strict lockdown measures and international travel restrictions. However, despite huge numbers of infections, the level of hospitalisations and deaths are nowhere near the level of previous waves and government’s have acknowledged that the Omicron variant is less dangerous than previous strains.

Bitcoin reclaimed $40,000 after briefly dropping below that level on Monday but failed to gain any large upside momentum.

“The cryptocurrency fought back to defend key support before peaking back above $42,500,” OANDA Senior Market Analyst Craig Erlam said.

“It’s since settled back around $41,500, leaving us none the wiser about where the next move will come.

“Clearly, there’s plenty of support at $40,000 but if Bitcoin is as sensitive to monetary tightening as it appears, how long can it hold?”


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MARKET WRAP: FTSE finishes higher, GBP/USD hits highest since 4th Nov

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