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MARKET WRAP: FTSE closes above 7,300, GBP sinks for second day after BoE

Economy2 hours ago (Nov 05, 2021 16:35)

© Reuters.

Key Points

FTSE 100 closing price of 7305.29, +0.4%
FTSE closes above 7,300 for the first time since Feb 2020
IAG trades higher after earnings
Travel & Leisure sector benefits from Pfizer pill
Nonfarm Payrolls smashes expectations, upward revisions
GBP trades lower for the second day after BoE surprise
Oil ends week on a high
Cryptocurrencies steady heading into the weekend

By Samuel Indyk – The FTSE 100 edged higher on Friday and closed above 7,300 for the first time since February 2020 as strong Nonfarm Payrolls and a less hawkish than expected Bank of England on Thursday continue to support UK stocks.

British Airways parent IAG (LON:ICAG) was one of the better-performing stocks in the UK after the company reported earnings pre-market. The airline recorded a loss of €452 million in the third quarter but sounded cautiously optimistic on the return of transatlantic travel in the coming months.

“The reopening of the transatlantic travel corridor will provide IAG the chance to showcase what it does best, including its focus on premium service,” said interactive investor Head of Markets Richard Hunter. “This could be a pivotal moment in the airline’s recovery, particularly given that the seasonal boost of the summer season did not materialise.”

The optimistic tone surrounding international travel also helped lift Rolls-Royce (LON:RR) towards the top of the blue-chip index.

Other Travel & Leisure stocks were also performing well, including cruise operator Carnival (LON:CCL), tour operator Tui (LON:TUIT) and coach company National Express (LON:NEX). The rally in the sector came after Pfizer (NYSE:PFE) announced its antiviral pill was shown to cut the chances of hospitalisation by 89% in adults at risk of developing severe COVID-19.

Speaking about Pfizer’s pill on CNBC, former FDA Commissioner Scott Gottlieb, said: “The end of the pandemic at least as it relates to the United States is in sight right now. The bottom line is we have an overwhelming toolbox right now to combat COVID.”

Pfizer shares jumped by as much as 11%.

Sticking in the US and focus was on the monthly jobs report. US nonfarm payrolls increased by 531,000 in the last month, above the expected 450,000. The unemployment rate dropped to 4.6%.

GBP/USD remained weak in the aftermath of the Bank of England decision on Thursday. The decision by the central bank to maintain its interest rate at a record low despite signalling that a rate hike could occur has left the bank with some credibility issues and criticism from economists and the press.

Gilt yields in the UK continue to reverse with 2-Year and 5-Year yields heading for the largest one-week decline since 2009.

WTI and Brent crude futures were higher on the day after OPEC+ decided to stick to their schedule to increase production by only 400,000 barrels per day from next month. Some had been calling for more, including the US, but the cartel kept a cautious approach. The focus will now be on the US to see if they do anything to combat higher oil prices, which could include releasing oil from the Strategic Petroleum Reserve.

Speaking on Bloomberg TV, US Energy Secretary Jennifer Granholm said President Biden was “looking at” a potential release from the SPR.

Cryptocurrencies were steady with Bitcoin struggling to push back towards the all-time high hit last month.

One story that did get attention was news that Kroger (NYSE:KR) was to begin accepting Bitcoin Cash as payment in its stores. The story sent Bitcoin Cash higher but the press release turned out to be fraudulent and the coin’s gains were quickly reversed.


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MARKET WRAP: FTSE closes above 7,300, GBP sinks for second day after BoE

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