MARKET WRAP: FTSE marches higher, GBP strong, Bitcoin steady

Key Points

FTSE 100 closing price of 7,376.55 (+0.5%)
Travel stocks lift FTSE
Flutter Entertainment higher on Italy deal
GBP strengthens
Crude up
Bitcoin remains below $50K

By Samuel Indyk

Investing.com – The FTSE 100 edged higher on Thursday, lifted by travel stocks after four separated studies all agreed that the severity of illness caused by the Omicron appeared to be lower than previous COVID strains. British Airways parent IAG (LON:ICAG) and jet engine manufacturer Rolls-Royce (LON:RR) both traded near the top of the blue chip index on hopes that the lower severity will mean international travel restrictions are unlikely to be as strict as they were at the start of the pandemic.

Flutter Entertainment (LON:FLTRF) shares rose after the company announced a deal for Italian gaming operator Sisal. The Paddy Power owner will pay €1.91 billion to CVC Capital Partners for Sisal, with the deal likely to close during the second quarter of next year.

GBP was stronger amid the broad risk-positive tone. GBP/USD traded back above 1.3400 and EUR/GBP remained below 0.8500 as markets continue to price in interest rate hikes from the Bank of England next year. As Scotiabank points out, over the past 10 days, the yield on the United Kingdom 2-Year has risen by roughly 30 basis points, compared to just 5 basis points for Bunds.

“The move in yields is pulling the EUR/GBP toward the 0.84 level and at 0.8439 at writing, the cross is trading at its lowest point since late-November,” Scotiabank said in a note. “While the BoE’s tightening cycle will act as a key driver for GBP strength against the EUR over the medium term, to keep the cross under 0.86, it may not provide much more ammunition for a move below 0.83 with markets already fully pricing in the feasible maximum of BoE hikes next year.”

WTI and Brent crude futures were both marginally higher heading towards Christmas in relatively quiet markets. A larger than expected drawdown in US inventories on Wednesday and optimism over Omicron appeared to support prices. Meanwhile, a fire at Exxon Mobil ‘s (NYSE:XOM) Baytown, Texas refinery helped support Gasoline RBOB Futures, although the oil major said there was “no adverse impact from the fire”.

Cryptocurrencies were relatively steady with Bitcoin holding below $50,000. The second-largest cryptocurrency, Ethereum, continues to hover around the $4,000 level.

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