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MARKET WRAP: FTSE posts gains, US stocks slide, cryptocurrencies edge higher

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Key Points

FTSE 100 closing price of 7,370.4 (+1.0%)
FTSE higher after Monday’s US rebound
US stocks edge back lower on Tuesday
Unilever in focus after strategy update
USD higher
Oil up on supply fears
Bitcoin steady after Monday rout and rebound

By Samuel Indyk

Investing.com – The FTSE 100 closed higher on Tuesday, piggybacking on the rebound seen in US stocks after the European market closed on Monday. On Monday, the Dow Jones Industrial Average had a 1,200 point swing from its low point, while the S&P 500 had its biggest intraday bounce since the 2008 financial crisis. However, the Nasdaq 100, Dow Jones and S&P 500 were all nursing losses at the close of European cash equity markets today with focus remaining on the Fed and the situation at Ukraine’s border with Russia.

Unilever (LON:ULVR) was in focus in the UK after the Marmite manufacturer announced it would be cutting around 1,500 jobs globally. The strategy update comes after the failed £50 billion bid for GlaxoSmithKline’s (LON:GSK) Consumer Health unit and pressure from shareholders. UK fund manager and top 20 Unilever shareholder Terry Smith has been critical of management while Nelson Peltz has also reportedly built a stake in the consumer goods company.

“The management team clearly want to show they are getting the house in order before embarking on another shopping spree, given how badly the bid was received,” Hargreaves Lansdown (LON:HRGV) Senior Investment and Markets Analyst Susannah Streeter said. “Shares rose initially on news of the clear out, but have lost ground, with some investors not satisfied that cost cutting alone will be enough to ensure Unilever turns a corner.”

The USD drifted higher with focus on the Federal Reserve’s monetary policy announcement on Wednesday. The two-day meeting kicked off today, and the central bank is expected to lay the groundwork for an interest rate hike at its March meeting.

GBP/USD was relatively steady but trading near a three-week low ahead of the meeting. The UK public sector borrowing figures were less than forecast in December at £16.848 billion.

“Despite the impact of Omicron, spending on the vaccine programme and rising interest payments, the Treasury has managed to keep a lid on expenditure while also benefiting from the pickup in underlying economic activity,” interactive investor Head of Investment Victoria Scholar said. “Nonetheless public sector borrowing still stands at the fourth-highest figure since monthly records began in 1993 with full year borrowing at nearly £150 billion.”

WTI and Brent crude futures were both higher despite a decline in US stocks as the supply picture continues to look fragile. Not only are there fears of eroding OPEC spare capacity, but the situation on the Ukrainian border with Russia could also limit supply. The US said they were pitting 8,500 troops on standby should an incursion take place. Of note, Russia is the third-largest producer of oil behind the United States and Saudi Arabia.

Bitcoin and other major cryptocurrencies were holding onto gains seen as they bounced along with US stocks on Monday. After hitting a low below $33,000 on Monday, Bitcoin bounced by around 13% to briefly trade back above $37,000.

“Bitcoin found support at $33,000 on Monday which isn’t far from a hugely important support zone around $30,000,” writes OANDA Senior Market Analyst Craig Erlam. “If risk appetite takes a turn for the worse again, we could see that come under severe pressure. If the price can hold above here in the short term, it could be a very positive sign.”

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MARKET WRAP: FTSE posts gains, US stocks slide, cryptocurrencies edge higher

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