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MARKET WRAP: FTSE ends higher, GBP up, Oil steady

Economy1 hour ago (Oct 26, 2021 16:31)

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Key Points

FTSE 100 closing price of 7,276.57, +0.7%
Reckitt Benckiser lifts FTSE
Entain falls as DraftKings deal off
Whitbread higher on recovery hopes
GBP higher as BoE enters blackout period, inflation expectations rise
Oil edges higher ahead of API inventory data
Cryptocurrencies steady

By Samuel Indyk – The FTSE 100 finished higher on Tuesday amid a global stocks rally that saw the S&P 500 hit another record high.

Reckitt Benckiser (LON:RKT) was one of the best performing stocks in the blue-chip index after the company lifted expectations for its like-for-like full-year net revenue growth to a range of 1%-3% from previous 0%-2%.

“These latest quarterly figures do offer some comfort,” said interactive investor Investment Analyst Keith Bowman. “Sales growth is ahead of forecasts, ecommerce revenues are up by 23% and potential for a pick-up in its cold and flu remedies persists as Covid restrictions ease.”

At the other end of the index was Entain (LON:ENT) whose shares declined after US rival DraftKings (NASDAQ:DKNG) said it would not be making a bid for the company. Entain’s relationship with US-based MGM (NYSE:MGM) may have complicated matters, according to Hargreaves Lansdown (LON:HRGV) Equity Analyst Laura Hoy.

“We suspect this setup will keep any other offers from rolling in unless they come from MGM itself,” Hoy said. “The US Casino operator already tested those waters and came up empty-handed, so we don’t expect to see much M&A activity in Entain’s future.”

Whitbread (LON:WTB) shares were higher as the company said the recovery at its hotel chain Premier Inn was ahead of expectations in the first half of the year. The group even said UK like-for-like RevPAR run rate has the potential to reach full recovery at some point next year.

In FX markets, GBP was higher as the Bank of England enters its blackout period before next week’s meeting. Members of the Monetary Policy Committee will now not be able to speak on the outlook for monetary policy before the 4th November meeting.

GBP/USD was higher as a measure of the UK public’s expectations for inflation over the next year jumped to the highest level since 2008. The Citi/YouGov survey, which is closely watched by the Bank of England, said expectations for inflation over the next 12 months rose to 4.4% in October from 4.1% in September. The data will do little to dissuade the hawks on the BoE that raising interest rates this year would be appropriate.

Both WTI and Brent crude futures edged higher on Tuesday ahead of the API inventory data after market. Supply looks set to remain tight and there’s no suggestion that the OPEC+ group will increase supply by more than the pre-planned 400,000 barrels per day when they meet next week.

Cryptocurrencies were mostly steady with Bitcoin trading around $62,000 with the world’s largest cryptocurrency in limbo after hitting a record high last week. Ethereum has been outperforming recently ahead of a network upgrade tomorrow that is another step towards a proof-of-stake mechanism, rather than the currently energy intensive proof-of-work.


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MARKET WRAP: FTSE ends higher, GBP up, Oil steady

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