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MARKET WRAP: FTSE edges lower, GBP nudges higher, Oil slides, Bitcoin hits $45K

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Key Points

FTSE 100 closing price of 7,564.9 (-0.1%)
Ocado tumbles after results
BP in focus following earnings
Oil prices fall
GBP, USD edge higher
Bitcoin hits $45K before paring gains

By Samuel Indyk – The FTSE 100 finished marginally lower on Tuesday with Ocado (LON:OCDO) weighing on the index following its results.

The grocery delivery company said FY group revenue increased 7.2% to £2.5 billion but still reported a loss before tax of £177 million, reflecting increased investments, particularly in its Solutions business. The company had been a COVID winner at the start of the pandemic but shares are now over 58% below the record high set in September 2020.

“COVID showed that grocery companies have no choice but to build a state-of-the-art online ordering and fulfilment service, yet Ocado has yet to capitalise on this once in a lifetime opportunity by signing up a swathe of new customers,” AJ Bell Investment Director Russ Mould said. “Investors are getting tired of hanging around for the big earnings breakthrough.”

BP (LON:BP) shares were marginally lower despite a swing to a profit of $2.3 billion in the latest quarter. The company also announced a dividend of 5.46 cents per ordinary share and said it intends to execute a further $1.5 billion share buyback from 2021 surplus cash flow. In general, higher oil and gas prices have helped BP, however, oil prices were lower on Tuesday which may have weighed on company shares somewhat. Focus in the future will fall on how successful BP can transition away from traditional oil & gas assets to renewable energy.

“Higher oil prices have offered BP a windfall, which the group’s put straight to work rewarding shareholders and expediting its transition toward renewables,” Hargreaves Lansdown (LON:HRGV) Equity Analyst Susannah Streeter said. “BP’s been more aggressive than some of its peers when it comes to clean energy, which could be a huge advantage if all goes to plan. However it could also prove to be somewhat of a money pit if BP doesn’t get it right.”

WTI and Brent crude futures were lower on Tuesday as discussion on the Iran nuclear deal resumed in Vienna. Optimism that a deal could be reached has helped weigh on crude prices at the start of the week, with the potential for an end of sanctions on Iranian oil exports if the sides agree to reinstate the original 20i5 agreement.

In FX markets, EUR/GBP dropped for a second consecutive day after the currency cross had reached its highest level since 23rd December following the ECB and BoE interest rate decisions last week. The BoE hiked its main interest rate while the ECB appeared to be preparing markets for a potential interest rate hike by the end of year. On Monday, ECB President Christine Lagarde emphasised that there was no need for large monetary tightening in the Eurozone as inflation is expected to fall back towards target.

Bitcoin traded above $45,000 for the first time since 5th January before dropping back below and sliding below $44,000 amid some touted profit taking.


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MARKET WRAP: FTSE edges lower, GBP nudges higher, Oil slides, Bitcoin hits $45K

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