FTSE 100 closes higher, GBP falls on reopening plans, Bitcoin drops By Investing.com

Key Points

• FTSE 100 closing price of 7,093.70, +0.23%
• Aviva higher as activist investor takes stake
• GBP falls as reopening timeline in doubt
• Oil choppy ahead of data, Iran talks
• Bitcoin drops towards recent lows

By Samuel Indyk

Investing.com – The FTSE 100 closed higher on Tuesday, supported by some strong company earnings and weakness in GBP. Shares in Intermediate Capital Group (LON:ICP) rose over 6% following a positive trading update pre-market. The company reported record profits in both its fund management and investment divisions.

Aviva (LON:AV) shares were in focus after activist investor Cevian Capital revealed a 5% stake in the company and pushed for the insurer to return £5bln to shareholders, saying that the company has been “poorly managed for years”.

British American Tobacco (LON:BATS) shares were also in focus after the cigarette maker lifted its revenue guidance for the year on a boom in alternative alternatives.

“The company will be hoping that customers stay loyal once it has hooked them in,” said AJ Bell investment director Russ Mould.

In FX markets, GBP was weak as there are doubts about whether the UK government can go ahead with removing the latest restrictions on 21st June due to increased cases of the ‘Delta’ variant. Although data suggests the vaccines are effective against the variant, data on the spread of the virus this week is thought to be key to whether any delay will be forthcoming.

On Sunday, the UK health secretary Matt Hancock said the UK would be “absolutely open” to delaying the easing of restrictions if it was warranted. Although ranges were relatively narrow GBP was weak against both the USD and EUR with GBP/USD dropping as low as 1.4120 and EUR/GBP reclaiming the 0.8600 handle.

WTI and Brent crude futures both swung between gains and losses ahead of Tuesday’s private US inventory data. WTI had reached $70 for the first time since late 2018 on Monday before paring gains with focus on Iran nuclear discussions on Thursday. If the deal gets reinstated there is expectation that Iranian crude could make its way back to market as sanctions on the country are relaxed.

Cryptocurrencies were some of the big movers with Bitcoin tumbling to its lowest level since 19th May when the world’s largest cryptocurrency fell over 14%. Bitcoin is now back around 50% from its all time high hit in mid-April with the latest reason for the sell-off pinpointed on an upcoming speech by President Biden where he is expected to be critical of the role cryptocurrencies have in enabling ransomware and cyber attacks.

Looking ahead

The American Petroleum Institute releases its oil inventory data after the US market closes today. Looking ahead to tomorrow, the Bank of Canada is due to announce its latest monetary policy decision but no changes are expected after the central bank announced it would be tapering asset purchases at its latest meeting.

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