Key Points
- FTSE 100 closing price of 7222, +0.1%
- Scottish Investment Trust higher on JPM deal
- Travel & Leisure stocks suffer as UK Covid cases increase
- Bitcoin hits record high in wake of ETF launch
- Oil turns higher after inventory draw
- GBP edges higher as inflation data keeps hike on the table
By Samuel Indyk
Investing.com – The FTSE 100 edged higher on Wednesday despite a fall in travel & leisure stocks as cases of Covid-19 in the UK continue to increase and warnings of a tough winter come from the health sector.
Cases have been rising sharply in the UK with a 17% increase in people testing positive over the last 7 days. Deaths are also on the rise. On Tuesday, the number of deaths recorded was the highest since March and there has been a 21% increase on average over the last week, however, they remain below the peak since during the previous winter. Nevertheless, the NHS Confederation has called for the government to implement mandatory face coverings in crowded places to help slow the spread.
The government appears reluctant to enforce any measures currently and the travel & leisure sector is suffering as a result. Airlines, including IAG (LON:ICAG), EasyJet (LON:EZJ) and Wizz Air (LON:WIZZ) were among the worst performing stocks in the UK.
Rank Group (LON:RNK) (casinos and bingo halls), SSP (LON:SSPG) (food concessions in airports and train stations), Cineworld (LON:CINE) (cinema chain) and Whitbread (LON:WTB) (hotel chain) were also near the foot of the FTSE 350.
One of the bright spots in the UK was Scottish Investment Trust (LON:SCIN) which has agreed to combine its assets with JPMorgan (NYSE:JPM) Global Growth & Income.
Bitcoin was again in focus and this time rocketed through its record high and above $66,000 in the wake of the launch of the ProShares Bitcoin Strategy ETF (NYSE:BITO). The launch of the ETF will give more investors exposure to cryptocurrencies, even though the approved ETFs are not directly investing in Bitcoin itself but Bitcoin futures.
WTI and Brent crude futures had been lower but both turned higher after the weekly inventory data from the Energy Information Administration (EIA). The EIA said that crude stockpiles fell by 431,000 in the latest week, the first decline in four weeks. Gasoline and distillate inventories also declined by more than expected.
On the data front, focus was on the latest inflation figures from the UK and whether this could impact the Bank of England’s thinking at its next monetary policy decision. CPI was slightly softer than expected, moderating to 3.1% from 3.2% previously as restaurant prices rose less than last year when the government’s ill-fated Eat Out to Help Out scheme ended.
“A November UK rate hike seems likely given Governor Bailey's recent comments, despite the dip in September's inflation rate, and the elevated uncertainty facing the economy over the winter,” said ING analysts in an emailed note.
GBP edged higher following the data as another barrier to a potential rate hike has now been removed. However, GBP/USD remained below the four-week high it hit on Monday following Bailey’s comments.
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