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MARKET WRAP: FTSE outperforms, USD strengthens, oil declines

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Key Points

FTSE 100 closing price of 7267.22 (+0.1%)
FTSE outperforms in Europe
UK daily COVID cases hit new record
Just Eat higher on Asda partnership
UK retail sales strong in November
USD stronger after central bank heavy week
Oil declines
Cryptos resume downtrend

By Samuel Indyk – The FTSE 100 outperformed other bourses in Europe on Friday but still finished the week lower in a central bank heavy 5-days that saw the Bank of England hike interest rates and the Federal Reserve announce plans to scale bank bond purchases at a faster rate.

On the COVID front, daily COVID cases hit a new record for the third consecutive day in the UK. The UK announced 93,045 people tested positive in the last 24 hours. In the last week, case numbers are up almost 40%.

In individual stocks news, Just Eat (LON:JETJ) was one of the better performers after the company announced a partnership with UK supermarket chain Asda. Just Eat will launch a trial from January where customers will be able to order groceries from five Asda stores, with the expectation that the choice will increase throughout the year.

UK retail sales increased more than expected in November as early Christmas shopping and Black Friday provided a boon for retailers last month. The Office for National Statistics said retail sales increased 1.4% last month, above expectations of a 0.8% rise. However, some analysts have cautioned that December may be tougher for retailers.

“Despite a surge in spend on the high street in November which did take cash away from those online behemoths, December’s already shaping up to be a very different story,” said AJ Bell Financial Analyst Danni Hewson. “Footfall is down dramatically and there will be some consumers deciding what they don’t have now they won’t be buying, or they’ll resort back to their virtual baskets.”

The stronger figures did little to impact GBP which pared back some of the gains seen following the Bank of England’s surprise rate hike on Thursday. GBP/USD was back below 1.3300 and EUR/GBP was hovering around 0.8500.

WTI and Brent crude futures were both lower with the Omicron variant continuing to pose questions about the demand recovery in the coming months. France has now introduced restrictions on travellers from the UK and although that is unlikely to have a major impact on oil demand, it signals how fragile the international travel picture is currently.

Cryptocurrencies were lower with Bitcoin dropping further from $50,000 although the moves were not particularly large in a historic sense for the asset class.

“The cryptocurrency has been consolidating for weeks since its flash crash and everything that’s happened in that time that has been the catalyst for volatility across various asset classes has done little to pique the interest of this particular corner of the market,” said OANDA Senior Market Analyst Craig Erlam. “It feels strange to be talking about massive volatility in the markets and not including Bitcoin. But then it’s been another strange year and I’m sure 2022 will be no different.”


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MARKET WRAP: FTSE outperforms, USD strengthens, oil declines

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