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FTSE 100 set to make flat start to the week despite talk of commodities supercycle

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Jim Armitage
·3-min read
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 (Glencore)
(Glencore)

The FTSE 100 was set to make a quiet start to the four-day week today even as talk of a “supercycle” in commodities markets got louder.

An increasing number of analysts have cited perfect storm factors including a looming surge in the Chinese economy, governments spending trillions of dollars in Covid recovery projects and heavy investment in green technology requiring huge quantities of metals to build.

Iron ore and palladium have hit record highs, as have timber and even agricultural commodities like wheat, sugar and dairy.

The boom in prices has reflected well in mining and other commodities-dependent stocks, from Glencore to Rio Tinto in recent months, but if analysts are right and the high prices will be in play for a sustained period of time, they could have further to go.

The FTSE 100 is particularly heavily skewed towards mining and commodities giants, and should benefit, too, if the supercycle thesis is correct.

Despite such talk, the FTSE was being called down 5.9 at 6985.1 by traders on the IG platform today.

Investors will be trying to figure out how to trade travel stocks after Boris Johnson yesterday suggested “some” international travel would be allowed to resume from May 17.

The comments, alongside European Commission plans to allow travel for those who have been fully vaccinated, could boost share prices in the sector, but Johnson was careful to caveat his words with a stress on how the government would be “cautious” about reopenings.

But for many the old City saying: “sell in May and go away, come back on St Leger’s Day” will be the playbook for London’s first trading session of the month.

Wall Street clearly ignored it, with shares posting some decent gains yesterday, but US futures were flat today, analysts at Avatrade noted, giving little cause for optimism in European trading today.

While markets have been cautiously celebrating better news on Covid in Europe, they remain concerned while the disease runs riot in India.

Federal Reserve governor Jay Powell yesterday stoked the confusing picture for investors when he said the economy was improving but still not out of the woods yet.

Bitcoin is struggling to break through $60,000, with Avatrade speculating it could fall back down to $50,000 if fails to breach those highs. Ethereum, however, “is certainly on fire”, the broker said, speculating the next stop could be near $5000, then it could head to $10,000.

Bitcoin was today at $55,986 and Ethereum $3382.

Shares in Cake Box should have a decent session after brokers Liberum issued a glowing note to clients on the bakery franchise’s prospects. It told investors to buy the shares right up to 360p from today’s 263p, pointing out that it is currently valued on a multiple of around a quarter of Domino’s UK.

Adland guru Sir Martin Sorrell declared his S4 Capital digital advertising empire had raised its like-for-like gross profit target from 25% to 30% after a strong first quarter’s trading for the highly acquisitive company.

Shares should respond positively at the group, which also announced a merger with Raccoon Group, a Brazilian digital ad performance agency set up by two ex-Googlers, Andre Palis and Marco Tulio Kehdi. The group specialises in advising clients on how their ads are performing and where they should advertise next.

On the Aquis stock exchange - a rival to the London Stock Exchange’s junior Aim market, e-commerce group Samarkand did £2.4 million of acquisitions with a duo of takeovers in the fertility, pregnancy and mother and baby sectors. The plan is to push the two companies’ products into China by the end of the year.

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