FTSE 100 reverses Friday losses as financials and energy rebound

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Europe

European markets had a strong start to the week in the absence of US markets, with the FTSE100 leading the way higher.

Banks are enjoying a decent rebound with solid gains, led by companies like HSBC and Standard Charteredwith Lloyds banking group not too far behind, following hawkish comments from Bank of England MPC member Catherine Mann, which propelled UK yields sharply higher and 2-year yields to their highest levels since December 2008.

BP and Shell are also enjoying a modest rebound as they look to cushion some of the big losses we saw on Friday, when oil prices suffered their biggest daily decline in more than a month.

Building and insulation contractor Kingspan Shares fell sharply, despite a record first-half trading result of around 415 million euros, well above last year’s 329 million euros. The slide seems to be in response to the comments according to which the orders have deteriorated in the past two months, the command taking for May and June being significantly lower than those of last year.

That valuation appears to have spilled over to other sectors, including UK homebuilders, which saw declines in companies like Berkeley Group, Persimmon and Barratt Developments fall to the bottom of the FTSE100, with Persimmon shares slipping to lows. two-year gap.

Primark Owner Related British Foods

At the end of last year, annual revenues fell to just under £13.9billion as the retailer, which also owns a food, sugar and farming business, battled the scourge of closures and covid restrictions.

In the first half of this year, the company recorded a 25% increase in H1 Group revenue to £7.9bn, while adjusted pre-tax profit reached £666m, an increase of 109%.

His Primark

Third quarter figures today appear to show the worst is behind it now that the group’s revenue rose 32% to £4.05bn, with the Primark business recording an 81% increase to £1.73 billion. C’est extrêmement encourageant, les revenus du troisième trimestre pour ce segment étant désormais largement supérieurs aux niveaux observés avant la pandémie.

Total year-to-date revenue rose 29% to £11.93 billion, with solid growth across all of its other businesses. In a nod to its lack of online operations, its Primark business plans to trial a click and collect service by the end of this year, in a number of stores across a range of children’s clothing, as it seeks to revive sales to pre-pandemic levels. The company kept its outlook for the full year unchanged.

EasyJet shares are weaker after the airline cut its capacity outlook for the rest of this year due to the various staffing issues facing the travel industry, not only due to staff shortages in its business, but also due to staff shortages at the airport.

For the third quarter, the airline said it expects capacity to be around 87% of 2019 levels, rising to 90% for the fourth quarter. These changes will have an impact on the costs that Easyjet expects to be punctual, because better long -term resilience will be integrated over time.

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US markets are closed.

Effects

Despite Fed Governor Christopher Waller’s hawkish comments over the weekend that he doesn’t care what is causing the current spike in inflation, the US dollar has retreated.

His comments that it’s the Fed’s job to bring inflation down and that the central bank is “all in” even if it means unemployment soars to 4.5%, seem to have been taken in stride, although with the US markets closed, there are probably fewer reasons to buy the US dollar today.

Commodity currencies are the best performers today, which is slightly counter-intuitive given the weakness seen in commodity prices today, with oil prices unchanged after their sharp falls on Friday.

The pound gave up early gains despite Bank of England policymaker Catherine Mann pointing to the very obvious fact that a weak pound means inflation is likely to stay higher for longer and that the central bank must be more aggressive in terms of hiking tariffs. His hawkish stance contrasts with the more relaxed approach of other MPC policymakers and acknowledges the fact that by the time the Bank of England meets again, US rates are likely to be a further 50-75 basis points higher.

The euro edged higher after ECB President Christine Lagarde reiterated the case for a rate hike later this month, as well as in September, indicating early signs of wage growth. She also maintained that the central bank was about to create a tool to deal with a possible risk of fragmentation, although details about this were not provided.

Goods

It was a fairly quiet day for crude oil prices today following steep falls on Friday, with little traction with US markets on vacation.

The prices of iron and copper ore are under pressure today due to the fears that the world economy is heading to the recession. Copper prices hit their lowest level in a year today as concerns over China’s economy for the rest of the year prompted a reassessment of near-term demand prospects. Another lockdown in Shenzhen over the weekend appears to have fueled this bearish narrative.

Bitcoin prices stabilized after briefly dipping below the $20,000 level over the weekend, but it still feels vulnerable to a washout, any move below $19,500.

Volatility

Shares of London-listed fashion groups ASOS and boohoo both continued to see higher prices during the weekend break after bargain hunters arrived. 12% on Friday. Daily vol on ASOS printed 407% vs. 154% on the month, while boohoo came in at 273% vs. 131%.

Crypto flight continues to fade after the panic observed at the beginning of last week in the wake of the suspension of Celsius. The key reading to watch here is the daily flight converging with the monthly print and it shows across the board. The most spectacular delta for this metric at the moment is observed on Bitcoin money, located 138% during 113% per month.

The yen found short-lived support in the latter part of last week, but it was not sustainable and hence a rapid reversal followed with USD/JPY ending the week around the 135 level. left the daily flight on the pair for Friday at 18.67% from 10.92%, although the action on the Swiss franc was increasingly pronounced as the market continued to digest the surprise of the rise in SNB rate. The daily flight on the Swiss dollar was 24.84% against 11.65% for the month.

And as with equity indices, the South African benchmark has found itself in the center of attention. Some emerging market economies are considered particularly vulnerable to global recession risks and the AS 40 is an integral part of this cohort. It fell on Friday morning after a public holiday, bringing the daily theft to 67% against 37% for the week.

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