Key Points
- FTSE 100 closing price of 7,385.77, +0.6%
- Auto Trader shares surge after trading update
- Johnson Matthey tumbles as CEO exits, plans unit disposal
- Burberry shares fall
- GBP/USD sinks to 2021 low following GDP
- Oil edges higher
- Bitcoin and other major cryptos retreat
By Samuel Indyk
Investing.com – The FTSE 100 jumped towards 7,400 as a softer pound helped lift the blue-chip index, with basic resources shares among those leading the gains.
Auto Trader (LON:AUTOA) was the best performing stock in the index following an 82% increase in revenue in the first half of the year. The company also reinstated its dividend.
“Demand for second hand cars has soared, amid the supply chain shortages affecting new models, turning forecourt online advertising into an even bigger cash cow,” writes Hargreaves Lansdown (LON:HRGV) Senior Investment and Markets Analyst Susannah Streeter. “The best ever six month results for the company sent the share price soaring.”
At the other end of the FTSE was Johnson Matthey (LON:JMAT) whose shares tumbled as much as 20% at one stage. The company announced its CEO would be leaving and also said it was looking to exit its battery materials business as the returns are not sufficient to justify the necessary investment. The company, which is known for making catalytic converters, also said it expects results to come in at the lower end of expectations amid high precious metals prices and supply chain problems.
Burberry (LON:BRBY) shares were also under pressure despite the company reinstating its dividend following a 38% jump in revenue during the first half of the year.
“We think the market’s reaction to Burberry results […] is somewhat harsh,” Hargreaves Lansdown Equity Analyst Nicholas Hyett said. “The revenue recovery has fed through to profits, helped by reduced discounting and price rises, and that in turn has led management to restart the dividend and announce a £150m share buyback. With operating profits on course to beat 2019 results for the year as a whole, the group seems to have put the pandemic behind it.”
GBP/USD sank to its lowest level of 2021 as the UK economy grew less than forecast in the third quarter. GDP was just 1.3% in Q3 versus analysts’ expectations of 1.5%.
“The UK’s growth figures are adding to selling pressure on the pound […] extending yesterday’s sharp drop against the US dollar as its downward trendline continues,” said interactive investor Head of Investment Victoria Scholar. “The pound has been trading in a descending trendline since the highs in May, retracing around a third of its gains since the pandemic-induced trough in March 2020.”
WTI and Brent crude futures had been lower but staged a slight recovery towards the end of the European morning with volumes expected to be lighter than usual due to Veterans Day in the US. Focus remains on the demand/supply picture with OPEC now expecting average oil demand of 99.49 millions barrels per day in 2021, down slightly from last month’s forecast.
Major cryptocurrencies were mostly lower with Bitcoin trading below $65,000 after earlier trading at a record high near $69,000.
“It may feel like there's plenty of momentum in bitcoin but it's having real problems fully capitalising on it as it continues to dip in and out of record territory,” said OANDA Senior Market Analyst Craig Erlam in an emailed note. “Bitcoin is certainly showing signs of exhaustion but it wouldn't be the first time it's done that before managing to dig deep and surge once again. And you wouldn't put it past it now.”
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