FTSE 100 closes lower, Bitcoin approaches $50k, Suez Canal blockage continues

© Reuters

Key Points

• FTSE 100 closing price of 6,676.83, -0.54%
• GBP gains against USD for first time in 6 days
• Bitcoin tumbles towards $50,000
• Oil falls, Suez Canal still blocked

By Samuel Indyk

Investing.com – The FTSE 100 closed lower on Thursday amid broad losses in the resources sector as metals and oil declined.

WTI and Brent crude oil prices were down over 5% as demand fears pick up pace with Covid cases continuing to increase in much of Europe. The summer travel season is looking less and less likely to return to anything near normal levels this year as more countries go into lockdown to curb the spread of the virus.

The blockage of the Suez Canal by the Ever Given container ship is having little impact despite supply being curtailed. “Around 10% of global seaborne oil trade passes through the canal, whilst around 8% of global LNG trade also uses the canal,” ING analysts said. However, the inevitable temporary disruption to supply appears to be overlooked for now.

Unsurprisingly, energy names such as BP (LON:BP) and Royal Dutch Shell (LON:RDSa) were lower in the blue-chip index while FTSE 250 companies Tullow Oil (LON:TLW) and Premier Oil (LON:PMO) were also lower.

Sticking with the midcaps, Cineworld Group (LON:CINE) fell 8% after the company announced a new convertible bond issuance. Alongside that, the company added that material uncertainty around its ability to continue as a going concern remains. The news comes as the company begins to reopen some cinemas, starting in the US from next month.

Pub names were weak after the UK Prime Minister Boris Johnson suggested vaccination passports could be required for pubs to reopen as normal. The plan, nicknamed Papers for the Pub by the most vocal critics, has not been well received by some in the industry or MPs in Johnson’s Conservative party. Marston’s PLC (LON:MARS), Mitchells & Butlers PLC (LON:MAB) and J D Wetherspoon PLC (LON:JDW) all fell as details of the plans surfaced.

GBP gained against the USD for the first day in six, benefitting from a thawing in relations between the EU and UK over vaccination exports. The two parties released a joint statement on Wednesday night saying they are working on steps to create a win-win situation and expand vaccine supply for all citizens. The easing of tensions should release some of the short-term pressure on sterling after GBP/USD had earlier hit its lowest level since February 5^th.

Bitcoin fell to its lowest level since March 8^th but found support ahead of $50,000. There was no catalyst for the move lower but a recent survey from Deutsche Bank showed over half of the respondents expect the cryptocurrency to be below $60,000 in 12 months time, while a note from Bank of America on the energy consumption of Bitcoin has also gained some traction.

Looking ahead

The UK’s Office for National Statistics releases retail sales figures tomorrow morning. The figures are notoriously volatile and often subject to revisions. This is even more likely given the uncertainty caused by the Covid-19 lockdown measures.

Today sees a press conference from US President Biden 17:30GMT where focus will likely be on plans for infrastructure spending and how this may be paid for, such as potential corporation tax increases.

At 17:00GMT, the US Treasury auctions 7-year notes for the first time since last month’s poorly received auction. The auction was covered just 2.04 times - the lowest on record – and led to a sell-off across the curve and was the catalyst for a big jump in Treasury yields.