The bloodbath continued across global equities markets on Tuesday. The FTSE closed down 0.7% in a better showing than its European peers, thanks in part to a weaker pound.
After a relatively strong start, the pound moved lower across the day as investors digested Brexit headlines and BoE Governor Mark Carney taking the hotseat before the Treasury Select Committee. Mark Carney told Parliament that believed that a smooth Brexit transition will happen which offered some support to sterling; as did comments that he thought Theresa May’s Brexit deal broadly supported economic outcomes. However, growing concerns over Spain’s claim over Gibraltar have since weighed on sentiment dragging the pound lower. The DUP is an additional concern for the pound, with tensions growing on a daily basis between Theresa May and the party upon whom she relies to hold up her government. The growing tensions don’t bode well for the Brexit vote in Parliament.
Easyjet drops despite 15% increase pre-tax profit
Compass Group topped the FTSE leader board, bucking the broader market trend thanks to impressive results. However, the market wasn’t so impressed with Easyjet’s results. As the low-cost airline reported that Brexit uncertainty had not hit led to a drop in demand, with a 15.6% increase in annual pre-tax profits the share price dived over 5%. This is most likely because investors are focused on rising costs, not encouraging for a low-cost airline, which by its very nature must keep costs to an absolute minimum. Costs after fuel being stripped out rose by 5.3%, a concern as we head into the seasonally more challenging winter months.
Oil sheds 4%
Oil plummeted across the session on Tuesday, falling deeper into bear market territory. Concerns of supply outstripping waning demand pulled the black gold 4% lower. Today’s decline saw oil hit its lowest level since October 2017 as it reaches declines of 30% since its four year high just six weeks ago.
Fears of slowing global growth are fuelling concerns over global demand, just at a time when Saudi Arabia, Russia and the US continue to ramp up production. The most recent Baker Hughes rig count increased by 2 last week, taking the number of rigs to 888, the highest number since March 2015. With oil trading heavily lower, the energy sector pipped tech stocks as the worst performer on the S&P.
After months of steady trading on Bitcoin, the past few sessions have seen volatility return with vengeance. Bitcoin dropped 7% today, extending Monday’s 14% losses as concerns following a hard fork in Bitcoin cash The price has rebound off 4411 however remains in a bear trend and firmly below its 200 day moving average.