Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown provided Business Leader some expert analysis of the current state of the FTSE 100 market and the value of Bitcoin.
It’s been a lacklustre start for the FTSE 100 despite some stellar retail sales figures showing consumers splurged big time in April.
The blue chip index dipped back below the psychologically important 7,000 mark. Caution appears to be the name of the game for many investors, with fears about rising inflation overhanging the market.
B&Q owner Kingfisher was the biggest faller in early trading, down around 4%.There are concerns about ongoing supply chain issues, and the increase in shipping costs. But also research from the ONS this week indicates that although shoppers shot out of the traps when retail re-opened in April, delayable spending on goods like furniture has fallen back over recent weeks.
British Land was also down by around 1% with fresh indications that the pandemic has brought about a dramatic change to the way we shop. Retailers with no physical store presence reported the largest growth in sales of 56 %, when compared with April 2019. This consumer behaviour is likely to weigh heavily on British Land’s commercial portfolio.
Leading the risers is Weir Group, the Glasgow-based engineering firm, which has displayed some nifty footwork in refocusing on mining as the oil industry took a hit during the pandemic. It’s been boosted after analysts at Morgan Stanley raised the target price for the stock, indicating they expect the share price to rise given its projected earnings and market conditions.
There has not been much respite for Bitcoin as it bumps around below the $40,000 dollar mark following the shock meltdown this week. 36% of Bitcoin’s value has been wiped out from the peak of $63,346 in mid-April.
Crypto holders who are hoping for a rapid bounce back from this week’s dramatic falls, should buckle up and expect another rollercoaster ride. Sentiment has shifted not simply because powerful influencers like Tesla’s Elon Musk have stepped back from being cheerleaders for Bitcoin. China’s ban on banks and payment firms from providing crypto transaction services is a major blow for Bitcoin’s use case and that of its rivals.
Another drag on the price could come amid mounting concerns about the amount of energy being used to mine crypto currencies. That could also lead institutions, who have bought in to Bitcoin to reduce their holdings, leading to fresh falls.
The direction of travel is though far from clear, as some crypto fans may see the recent falls as an opportunity to buy into currencies like bitcoin at a cheaper price.
Given the huge volatility and that the use case of crypto currencies is far from proven, traders should only dabble with money they can afford to lose.’’