FTSE 100 closes lower, crude oil weak after inventory data, GBP steady By Investing.com

Key Points

• FTSE 100 closing price of 6,764.88, down 0.6%.
• Telecoms names higher after spectrum auction
• Rolls-Royce (LON:RR) rally continues
• WTI crude oil and Brent both weaker after weekly inventory data
• GBP and US Dollar steady ahead of Federal Reserve, BoE meetings

By Samuel Indyk

Investing.com – The FTSE 100 closed lower in cautious trade ahead of the Federal Reserve meeting where focus is going to be on the Summary of Economic Projections and famed Dot Plot. Markets are looking out for whether the Fed will bring forward their expectations for timing of the first rate hike.

Telecommunications shares were higher throughout the day with BT Group PLC (LON:BT) shares jumping over 6% and Vodafone (LON:VOD) higher by 2% after the UK announced the results of its spectrum auction. There had been some expectation that the auction could raise as much as £2.5bln for the government but the telecoms companies paid just £1.36bln, only slightly higher than the reserve price of £1.1bln. EE, owned by BT, spent about £450mln to boost their spectrum while Vodafone spent around £175mln.

Rolls-Royce continued its recent rally as shares increased for their 6th consecutive day. This time the catalyst was an upgrade from JPMorgan) who took shares from ‘underweight’ to ‘neutral’.

“Rolls-Royce’s shares have significantly underperformed peers since 2018 and this is attracting investors,” said JPM analysts in a research note.

Crude oil futures were weak with WTI and Brent crude both falling after the weekly US inventory data. The Energy Information Administration said crude oil stockpiles rose by 2.396mln barrels in the latest week, although this was slightly lower than the 2.96mln expected.

Forex markets have been relatively quiet ahead of the all important Federal Reserve announcement at 18:00GMT. The US Dollar Index traded in a narrow range just below 92.00 as markets wait to see if the Fed forecast any rate increases in or before 2023. GBP/USD was flat ahead of the Fed and also the Bank of England interest rate decision on Thursday. Not much is expected from the BoE as they are in wait-and-see mode given the uncertainty of the speed of recovery amid the vaccination effort and as the economy starts to reopen from the strict lockdown in early 2021.

Bitcoin has fallen for the third consecutive day after hitting its record high during the weekend, its longest losing streak since December. With focus on the Federal Reserve decision, the prospect of higher interest rates in the US could weigh on Bitcoin which has benefitted from liquidity provided by ultra-loose monetary policy.

Looking ahead

Get up to speed with everything that is expected from the Federal Reserve meeting with the video below: