FTSE100 slips back on commodity price weakness

Europe

European markets have got the new week off to a slow and mixed start with a weak commodities sector weighing on the FTSE100, with weakness in basic resources and energy acting as the main drag.

We appear to be seeing some profit taking in miners after the broker upgrade inspired gains of Friday which saw Anglo American and Antofagasta pop higher. BP and Shell are also acting as a drag on the back of further weakness in oil and gas prices.  

William Hill owner 888 Holdings is higher on reports that it had been the subject of a bid approach from Playtech during the summer.  

Rolls-Royce shares have risen to 4-year highs on the back of yet another broker upgrade, this time from JPMorgan who have put a 400p price target on the shares.

DS Smith is also doing well after a broker upgrade of its own, from Barclays with a price target of 360p, with the broker saying that it is undervalued relative to its peers Mondi and Smurfit Kappa.    

US

After Friday’s positive finish US markets have started the week on the back foot, opening lower in response to the weak start to the week for European markets, and a rebound in bond yields which has seen the Nasdaq 100 slide by 1%.

Spotify shares are higher after the music and podcast streaming company announced it was laying off 17% of its staff, despite posting a profit in its most recent quarter. This would be the 3rd time this year the company has announced job cuts despite adding millions of new users over the last 12 months. The costs of these changes have prompted the company to downgrade its forecasts for Q4 operating losses to €100m, down from a profit of €38m.  

Virgin Galactic shares have dropped sharply after Richard Branson ruled out putting more money into the venture.

Alaska Air is sharply lower after the weekend announcement it had agreed to buy its rival Hawaiian Air for $1.9bn, with the latter’s shares up over 150%.

Meta Platforms shares have slipped on the open after it was reported that Mark Zuckerberg sold $185m worth of share in November, according to regulatory filings released last week.

Today’s surge in bitcoin above $42k has seen the likes of crypto related shares surge on the US open with the likes of Coinbase, MicroStrategy, Marathon Digital, and Riot Platforms all strongly higher.

Uber has got a lift on reports that it will join the S&P500 on 18th December.  

FX

The US dollar is seeing a bit of a rebound after the losses of last week, with the rise in yields helping to give it a welcome lift, while European yields move the other way.

The Norwegian krone is seeing the worst of today’s weakness due to weakness in both oil and gas prices.

Not far behind the pound is also lower after failing to push above the 1.2730 area for the third time in as many days, which has prompted some profit taking after 3 consecutive weeks of gains.

The Australian dollar is also in retreat ahead of tomorrow’s RBA rate meeting where the central bank is widely expected to keep rates on hold at 4.35%, although they could spring a hawkish surprise in the same manner as the RBNZ by upgrading their forward estimates for rates in 2024 and 2025.  

Commodities

Gold prices surged sharply in Asia trading putting in a new record high of $2,148 as momentum from last week spilled over into the new week. These new record highs haven’t stuck which is a bit of a worry if you’re bullish for further gains and suggests a possible short term bull-trap. The rebound in US yields is acting as a drag on gold which if it sticks, and gold prices finish the day lower, suggests we could see a further decline before we see a return to today’s record levels.

Crude oil prices have remained under pressure on concerns over slowing demand, as well as some scepticism that the OPEC+ mandated cuts of an extra 1m barrels a day will hold, and the fact that US production continued to break new records.