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MARKET WRAP: FTSE, oil, Bitcoin higher as Omicron variant assessed

Economy3 hours ago (Nov 29, 2021 16:25)

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Key Points

FTSE 100 closing price of 7,113.4 (+1.0%)
Friday’s Omicron moves reversed in major markets
BT shares rally despite Reliance takeover denial
AG Barr shares pop higher after trading update
Oil higher but gains capped
USD higher after Friday weakness, EUR falls
Bitcoin reverses Omicron induced drop

By Samuel Indyk

Investing.com – The FTSE 100 traded higher on Monday, reversing some of the losses incurred on Friday after the discovery of the Omicron variant. There remains a lot of uncertainty surrounding the new variant, such as whether it evades the vaccine and whether it is more deadly. However, scientists in South Africa have suggested that vaccines appear likely to prevent severe infection.

In individual stocks news, BT (LON:BT) shares initially jumped on reports in Indian press that Reliance Industries (NS:RELI) was mulling a bid for the London telecoms group. Reliance denied the story which initially saw BT shares pare gains, however, the stock still ended the session higher with BT still seemingly an attractive prospect for a takeover.

“You can understand why BT might attract interest,” said AJ Bell Investment Director Russ Mould. “Despite its substantial pension liabilities and debts and iffy track record, it has a near monopoly position in the UK’s broadband network. And, for all its recent woes, BT has the capacity to generate substantial cash flows.”

A.G.Barr (LON:BAG) saw its shares pop higher after a trading update. The Irn-Bru maker raised its full year sales and profit forecast on improving demand.

Oil giant BP (LON:BP) and Royal Dutch Shell (LON:RDSa) were higher as oil prices retraced some of the losses seen on Friday. WTI and Brent were up around 4% at the close of European stock markets but well off best levels as uncertainty surrounding Omicron is keeping a lid on prices for now. A note out from JPMorgan (NYSE:JPM) garnered attention, with the US bank saying they see oil hitting $125 per barrel next year and $150 per barrel in 2023, citing lower than expected OPEC spare capacity.

The US Dollar Index regained some of the losses seen on Friday with traders still unclear on what the new variant will mean for the Fed’s tapering schedule. Fed Chair Powell is scheduled to testify to Congress on Tuesday where we may get a clearer idea of whether the Fed sees Omicron as a threat to the economic recovery.

The Bank of England is in a similar position with markets now pricing in just a 33% of a rate hike in December, while a February hike is priced at about 80%.

“The emergence of the Omicron variant has now crystalised fears that we’re not out of the woods just yet as far as the pandemic is concerned, and led to a shift in monetary policy expectations,” said AJ Bell’s Head of Investment Analysis Laith Khalaf. “It’s still early days in the analysis of the new variant, and the fact that markets have now alighted on February as the likely month for a UK interest rate rise shows there is still considerable optimism that Omicron is a stumbling block, rather than a brick wall.”

Bitcoin was another asset class that recovered some of the losses seen on Black Friday.

“Bitcoin has successfully held its 100-DMA, today at $54,210.00 for three sessions in a row,” said OANDA Senior Market Analyst Jeffrey Halley. “My bearish radar won’t shout target acquired until we see a daily close well below that level. But if we do, a move below $50,000.00 is possible.”

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MARKET WRAP: FTSE, oil, Bitcoin higher as Omicron variant assessed

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