• FTSE 100 live: Shares slide as Currys bidder walks, bitcoin surges to k
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    FTSE 100 live: Shares slide as Currys bidder walks, bitcoin surges to $72k

    desk Posted on

    • FTSE 100 down 24 points

    • Currys falls as suitor walks away

    • Gold and bitcoin climbing to new all-time highs

    The crypto markets do not pause for lunch (and North America is waking up early due to daylight saving too), with bitcoin continuing to rumble higher. 

    Bitcoin has now topped $72,000, helped by a major groundswell of support from traditional finance, as data from Bloomberg indicates that more than $55 billion of bitcoin’s total circulation is now held in exchange-traded funds.

    That means 10 firms now hold around 4% of all bitcoin in circulation, according to our crypto report.

    Year to date, BlackRock’s iShares Bitcoin ETF and Fidelity’s FBTC product are currently the third and fourth most active funds in the entire ETF space.  

    120.5pm: FTSE wallowing

    As lunchtime approaches, the FTSE 100 index has been wallowing in a negative position almost all morning, down 36 points or almost half a percentage point at 7,623.69.

    Miners remain the dominant fallers, led by Rio Tinto PLC.  

    St James’s Place PLC is also in among this group, following more weekend stories on the growing number of complaints against the UK’s largest wealth manager. 

    Ladbrokes and Coral owner Entain PLC (LSE:ENT) is not far away either, with new data emerging on US sports betting market and analysts Jefferies highlighting that it fell for Entain’s BetMGM joint venture. 

    Similarly, the FTSE 250 is down 0.35% at 19,531.

    Top of the mid-cap leaderboard is Admiral Group PLC, bouncing back from the big fall at the end of last week on the back of results, where boss Milena Mondini de Focatiis said its motor insurance prices had peaked. Ocado Group PLC is also back after a Friday fall.

    Tobacco company Imperial Brands Group PLC is up after confirming a “second share buyback tranche” of up to £550 million. This was flagged as part of a wider £1.1 billion plan in October, the first half of which has been concluded it said. 

    Marks & Spencer Group PLC is up 2% thanks to an upgrade from RBC Capital Markets. Analysts moved the retailer to ‘outperform’ from ‘sector perform’ and hiked the share price target to 300p from 285p.

    11.20am: Stock market indicators

    A key stock market indicator has started to retreat from recent “extreme levels”, says RBC Capital Markets, which has coincided with a “stealth rotation” in the leadership of the tech megacaps.

    The key sentiment indicator is the American Association of Individual Investors (AAII) investor sentiment survey, which has started to retreat after hitting extreme levels. 

    “AAII net bulls have been elevated at roughly one standard deviation above the long-term average since the start of the year,” says Lori Calvasina, head of US equity strategy in her regular Pulse email to clients.

    Another indicator is the Commodity Futures Trading Commission (CFTC) buyside positioning data, which shows how institutional investors like as hedge funds, pension funds, and investment banks are betting on futures prices.

    For US equity futures it also been sitting at 2018-2020 peaks.

    “Both [indicators] have been highlighting the vulnerability of the US equity market to a pullback that has not yet materialized,” says Calvasina. 

    “While there wasn’t a big change in AAII last week, we did see a sharp move lower on CFTC’s US equity futures positioning gauge. This was driven by a drop in positioning in Nasdaq 100 futures, which had been sitting well above historical highs.

    “While this has not been accompanied by a decline in the equity market generally, it has been accompanied by a clear weakening in the leadership of the mega growth stocks that have been dominating the stock market and some very sneaky outperformance in the Russell 2000 since early February.”

    She also flagged the “policy bread crumbs” in President Joe Biden’s State of the Union speech last week.

    “Things that stood out to us from a stock market/economic perspective included the emphasis on his foreign policy, immigration and the desire to pass the border bill, individually focused economic initiatives on housing and preschool, and the desire for corporations and billionaires to pay more in taxes but not those making under $400k.

    “We found ourselves a little surprised by how much Health Care was in focus, and how there was a bit less of a focus on reshoring (again, in terms of forward-looking plans) and climate/Energy.

    “The tone on China seemed less harsh than Trump’s. We also took note of a comment on the need to impose some limits on AI and pricing on consumer goods.”

    11am: Gold call from UBS

    Gold has continued to hit record highs despite several headwinds and UBS reckons the price could see a pullback in the near term, but “this does not mean the rally can’t go further over the coming year”.

    The Swiss bank sees gold being supported by several trends, including the Fed appearing on track to cut rates and support from central banks and investors buying gold.

    “We remain positive on the price of gold for 2024, and continue to recommend it as a portfolio hedge,” says UBS chief investment officer Mark Haefele.

    “We expect gold to trend higher to USD 2,250/oz, but would wait for price setbacks to gain exposure, even if these turn out to be modest and brief.”

    The bank also likes gold miners but only some, noting that “given many have lagged gold’s rally, [they] may offer appealing relative value versus the physical metal, and have the potential to generate income for investors in ways that gold cannot”.

    10.35am: Not all gold is the same for investors

    While gold spot prices increased to all-time highs, physical gold ETFs continued to record outflows, noted RBC Capital Markets, totaling 285k oz for the week and bringing total year-to-date outflows to 3.4m oz.

    Physical silver ETFs also recorded outflows of 12m oz, the largest weekly outflow since last March’s 15m oz.

    Gold equities increased by 8.5%, RBC said, while and gold equity ETFs recorded larger inflows of $226 million.

    “Larger weekly equity price changes for companies under coverage relative to the index include St. Barbara (24%), Gatos Silver (20%), Argonaut Gold (19%), and Coeur Mining (NYSE:CDE) (16%).”

    10.14am: European stock markets all lower

    Markets around Europe are all in the red, with the falls in the FTSE 100 and 250 sharpening but not the worst of the bunch.

    London’s blue-chip index is down 24 points or 0.3% at 7634.5, with the mid-cap index down 0.27%.

    But Germany’s DAX is down 0.7%, though like its US peers did hit an all-time high last week, unlike its British counterpart. 

    Italy’s FTSE MIB index is down 0.6%, France’s CAC 0.4% and Spain’s IBEX 0.3%.

    The Stoxx 600 is down 0.44%, with the biggest faller being Telecom Italia, down 8.2%, with others in its wake including BE Semiconductor, Raiffeisen Bank and Worldline.

    Summing up the morning for equities around the world so far, analysts at Saxo Bank noted that it has been “mixed”, with US futures also starting the week lower.

    “Asia traded mixed overnight with gains in China while the Nikkei slumped on mounting speculation the BOJ will soon raise interest rates for the first time since 2007.”

    The stronger yen is negatively impacting the export-driven stocks in Japan, they added.

    “A similar dynamic is happening in Europe as the EUR is strengthening sending the Stoxx 50 futures down 0.8% in early trading hours. S&P 500 futures are starting the week down only 0.2%.”

    They remind that the US went on daylight savings time over the weekend, so the US cash equity open starts an hour earlier.

    “The big single stock story on Friday was the huge intraday move in Nvidia with the stock moving 11% from the high to the low. This is a very bad signal in terms of market health and tells us that speculation is running rampant. Key focus this week is whether the market will reverse, and volatility will pick up,” Saxo concludes.

    9.46am: ONS inflation basket

    The imaginary basket of goods that the Office for National Statistics uses to calculate changes to inflation is being updated to reflect trends and changes in British spending habits.

    This year’s update sees items like hand sanitiser, sofa beds and baking trays dropping out to be replaced by vinyl records, air fryers and rice cakes.  

    Other items being dropped from the ONS inflation basket include rotisserie-cooked whole chickens (supermarkets are offering smaller items such as chicken thighs) and draught stout such as Guinness (prices for draught bitter will still be tracked and show similar price movements).

    Air fryers have seen rapidly increasing spending in recent years due to purported energy-saving and healthier-eating benefits, ONS said (and one of the characters in the latest series of the Masked Singer even performed in an air fryer costume).

    Meanwhile, vinyl records make a return to the basket after enjoying a resurgence in popularity (could CDs come back too?).

    “Our inflation basket of goods offers a fascinating snapshot of consumer spending through the years,” said Matt Corder, ONS deputy director for prices.   

    “Often the basket reflects the adoption of new technology, but the return of vinyl records shows how cultural revivals can affect our spending.”

    9.31am: Lack of tech in the FTSE

    The lack of exciting big tech stocks in the FTSE 100 is usually cited as one of the reasons for its anaemic performance in recent years, but it is helping London’s blue-chip index this morning. 

    So says AJ Bell investment director Russ Mould, after tech stocks, including recent crown jewel Nvidia, led a sharp reverse at the end of last week.

    “The UK index’s limited tech exposure may have spared it from losses given the weakness on Wall Street originated in that sector,” says Mould. 

    The falls came as investors chewed over a mixed US jobs report, which Mould called a “real curate’s egg of a release”, with the job additions number higher than expected, but revisions to previous data suggesting the unemployment rate was at its highest in two years.

    “Lower wage growth will have encouraged the idea rate cuts are on the way but the hints at a cooling economy suggest the landing may not be as soft as the market would have liked,” he says. 

    Tomorrow’s US CPI report will help shape the narrative for markets this week, Mould says. “Any signs inflation is proving more stubborn to shift than expected, even in a deteriorating economic environment, could present the Federal Reserve with something of a conundrum.”

    On Currys, he notes that this “doesn’t mean the target is no longer in play”, with Chinese group JD havig already expressed interest and Elliott’s recent approach “may have put the electricals retailer on the radar of others”.

    Reports based on conversations with big shareholders and analysts suggest 75p is a “more realistic” takeout price, Mould adds, effectively giving “any other interested parties a starting point for negotiations if they want to throw their hat into the ring”.

    9.25am: Ukraine prosecutor move hits Ferrexpo 

    As well as Currys, which is down almost 9%, the FTSE 250 is also being anchored by a 7% fall for Ferrexpo PLC after it was hit by a court order in Ukraine issued at the request of the state prosecutor.

    The prosecutor is looking to freeze the bank accounts belonging to its subsidiary, Ferrexpo Poltava Mining (FPM), linked to an ongoing police investigation in Ukraine from late 2022 concerning the alleged illegal extraction of minerals.

    A supplier and related party to FPM called Kysen has also had an application to open creditor protection proceedings accepted by the Commercial Court in Poltava Oblast, with Kysen claiming 2.2 million Ukrainian hryvnia, approximately US$58,000.

    “Ferrexpo is working closely with its legal counsel and other advisers to consider and address the situation,” the company said, adding that its operations remain unaffected at this time.

    The mid-cap index is down 35 points so far, while its larger sibling is also moving lower again, down 14 points at 7,645, having flirted into positive territory for a few minutes earlier. 

    9.05am: Why are gold and bitcoin at all-time highs?

    Gold and bitcoin making fresh record highs as the US dollar moves lower along with Treasury yields, is what market analyst Neil Wilson at Markets.com and some others are calling the “debt debasement” trade.

    “But why have we seen such a decisive move in these two rather different ‘hard’ assets when USD is still well above even the Dec lows and the 10yr is still north of 4%? This rally for defensive and speculative assets seems to be sending a mixed message about risk appetite,” Wilson says.

    “For Bitcoin, you have the obvious catalyst of the SEC’s approval of a spot ETF, meaning investors can get easy access to it. It also tends to do well when the Nasdaq does well – Bitcoin could be riding on the coattails of the AI boom and is generally doing well when liquidity is ample. A halving is approaching, too – usually a positive.   

    “For gold, yields have come down a lot, the dollar has edged off, central banks are buying, China is driving physical demand – but we are far from negative real yields… [and] it’s clear that we are a long way off the kind of negative rates backdrop that would be considered more supportive of gold prices than a world of positive real rates.” 

    He says the all-time highs are “not just inflation hedges”, with equity markets also continuing to advance into clear blue water, with new highs for the DAX, Stoxx 600, ASX 200, S&P 500 and Nasdaq last week.  

    “I feel you have to look at this ‘debt debasement’ trade – US and others running ever-higher deficits, racking up more and more debt as they seek to finance more wars, ageing populations and unfettered immigration,” says Wilson.

    “And it seems there is little appetite in Washington to reduce government spending or raise revenues – the election this year has broad implications for markets. “

    He notes a Bank of America note from last month that flagged US national debt rising $1 trillion every 100 days, with the move from $32 trillion to $33 trillion taking 92 days, $33 trillion to $34 trillion 106 days, $34 trillion to $35 trillion 95 days.

    “Financing domestic bliss & overseas wars US budget deficit past 4 years = 9.3% of GDP … little wonder ‘debt debasement’ trades closing in on all-time highs,” BofA said.   

    8.55am: Bitcoin tops $70k… then $71k

    It’s not just gold that’s maintained its support over the weekend, bitcoin has also regained the $70,000 mark this morning.

    As detailed in our daily crypto report, the world’s largest cryptocurrency ascended briefly above $70,000 for the first time in its 15-year history on Friday, before a spate of profit-taking sent it lower.

    But weekend trades continued to move in the right direction and this morning there has been an extra spike, with bitcoin’s dollar price currently trading at $71,252.88 at the time of writing.

    BTC/USD is up around 48% over the past month and almost 250% over 12 months.   

    A bitcoin halving event takes place in 37 days, with mining rewards due to halve for the fourth time after the 740,000th block is mined.

    Supply-and-demand economics stipulates that fewer bitcoins entering the market increases the scarcity of the circulating bitcoins, with the internet awash with graphs proving just how great each bitcoin halving has been for the price.

    8.19am: FTSE opens in the red

    The FTSE 100 has indeed started in the red, though not as bad as some expected and with the worst losses already being pared back. 

    Weighed down by miners, London’s leading index dropped around 30 points at the open, but is now down just 5 points at 7,654.51.

    It’s a similar story with the mid caps of the FTSE 250, which are down 43 points at 19,558, led by Currys PLC (LSE:CURY), which is down 8.5%.

    This followed US suitor Elliott saying it would not make an offer for the electrical products retailer after being rejected twice.  

    Biggest fallers are Rio Tinto, Glencore, Anglo American and Antofagasta.

    China is often cited as the cause of mining sector dips, but stock markets in the People’s Republic are in the green this morning following the weekend’s CPI data showing prices were up 0.7% in February, after a four-month run of deflationary read-outs.

    Nevertheless, market analysts say concerns over Chinese growth continue to hold back commodities prices.

    “The more bearish sentiment [from Asia] washed on to UK shores in early trade, with ongoing questions over demand from China weighing on mining shares,” says Richard Hunter at Interactive Investor. “Indeed, there was some mild weakness in companies with a strong notable exposure to China, such as Prudential and Burberry.”

    One commodity on the up is gold, where the price remains close to record highs after last week’s surge.

    “Some may read gold’s strength as an indicator of confidence in summer rate cuts, but continued geopolitical tensions have also been a key contributor,” says Derren Nathan at Hargreaves Lansdown.

    7.44am: Sharp fall expected

    Traders are taking an even dimmer view of the FTSE 100’s prospects, with the index now down 40 points on spread-betting platforms. 

    Does the Currys news suggest that the hype about UK companies being cheap is not enough to cut the mustard for buyers, especially while markets remain unertain.

    Market analyst Kathleen Brooks at XTB said “the sustainability of the rally in stock markets is facing a tough test this week”, with volatility having stepped up on Friday, with even stock market darling Nvidia dropping by more than 5%.

    “Added to this, US CPI and retail sales data will be released this week, and they could show a slow retreat for prices and a strong consumer, a mix that is likely to keep the Federal Reserve cautious about the timing of rate cuts.”

    After the retreat in US stocks at the end of last, the pullback in risk sentiment has impacted the Asian session at the start of this week, she notes.

    The recently record-setting Nikkei is down more than 2%, while India’s Nifty indices are also in the red.

    Looking ahead at this week, Brooks says she thinks “event risk could stymie any attempt for stocks to recover”.

    7.30am: Currys suitor walks away

    Currys PLC (LSE:CURY) shares are likely to fizzle lower when trading starts this morning after US suitor Elliott Advisors said it now “does not intend to make an offer“.

    It said this was because the Currys’ board rejected its “multiple attempts to engage” and have a look at the books, and so is “not in an informed position to make an improved offer for Currys on the basis of the public information available to it”.

    The second and most recent offer was worth 67p a share at the end of last month, against 62p in its original approach.

    That valued Currys at just over £750 million.   

    7.17am: FTSE 100 to start lower

    The FTSE 100 is being tipped to continue its losses from the end of last week, with this week bringing some important macro data.

    London’s blue-chip share index was down 28 points on spread-betting platforms on Monday, having last ended at 7,659.74, down 0.3% over the prior five days.

    The major US equity indices also finished last week in the red, led by tech stocks.

    After the London Stock Exchange last Friday, we saw a mixed US jobs report, showing significantly more new jobs that had been pencilled in by economists but flat wages.

    Gold also notched another record high, hitting $$2179 per oz, with analysts saying this was the market’s way of taking comfort in the idea that the US Federal Reserve will cut rates in June.

    This morning we have had some UK jobs data, with the KPMG and Recruitment and Employment Confederation (REC) UK report on jobs, which has shown staff placements fell again last month, with starting salaries and temp wages both increasing at slower rates.

    Vacancies data showed that overall demand for workers declined at the quickest rate since the start of 2021.

    Official UK unemployment numbers are due tomorrow, tipped to show people in work holding up well given the mixed economic backdrop.

    Wednesday sees UK GDP numbers, with the economy tipped to grow slightly by 0.2% having tipped into a technical recession in the three months to December.

    The big macro news this week will be US inflation at the consumer level tomorrow and also at the factory gate on Thursday.

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