FTSE finishes lower, USD strong, oil rallies By Investing.com

By Samuel Indyk

Key Points

• FTSE 100 swings between gains and losses, finishes lower
• US adds more jobs than expected in February
• USD strong following jobs report, Powell
• Brent and WTI rally for second day after OPEC

Investing.com – The FTSE 100 swung between gains and losses to finish in the red, dragged down after the US markets opened in the wake of the stronger than expected nonfarm payrolls figure. Although the figure should increase the likelihood of a faster recovery it may reinforce concerns that the Federal Reserve will begin to withdraw monetary stimulus from the economy sooner than originally planned.

UK banks were strong throughout the day after Fed Chair Powell’s comments on Thursday where he played down any need to urgently act to control the recent moves in interest rates. With yields free to move higher, banking names should see their profitability improve as the squeeze on margins from ultra-low interest rates starts to subside. Standard Chartered (LON:STAN), Barclays (LON:BARC) and HSBC Holdings PLC (LON:HSBA) were all at the top of the blue-chip index.

BP (LON:BP) and Royal Dutch Shell (LON:RDSa) rallied as oil prices touched their highest level in fourteen months. The news comes after OPEC decided to roll over production cuts and effectively keep production unchanged through April when many had expected an increase in production of up to 1.5mln bpd. This prompted many banks to upgrade their forecasts for oil prices with Goldman Sachs expecting $80/bbl in Q3 and Citi calling for Brent to hit $70/bbl by the end of the month. There isn’t far to go after Brent hit $69.33 in today’s trade.

FX

The USD was higher with the DXY rising above 92.00 for the first time since November last year. GBP/USD, after being within a whisker of 1.4000 yesterday, dropped below 1.3800 for the first time since February 12th following the US data.

Bank of England policymaker Jonathan Haskel also sounded caution regarding the UK’s economic recovery, saying that policy should lean strongly against downside risks to the outlook and that he would be open to the possibility that further support may be needed to return inflation to target sustainably.