FTSE 100 falls, midcaps jump on earnings, GBP regains lost ground, Bitcoin higher

imageEconomy2 hours ago (Jul 22, 2021 16:33)

© Reuters.

Key Points

  • FTSE 100 closing price of 6969, -0.42%
  • Midcaps outperform blue-chips on strong earnings
  • ECB remains on hold, guidance tweaked
  • GBP regains lost ground
  • Oil trades higher on demand recovery hopes
  • Bitcoin above $32K after Musk intervention

By Samuel Indyk

Investing.com – The FTSE 100 underperformed the FTSE 250 on Thursday as a number of positive earnings from some of the midcaps lifted the index.

Meanwhile, Unilever (LON:ULVR) weighed on the blue-chip index following its trading update pre-market. The consumer goods company said it expected profit margins to remain flat this year, having previously expected a minor increase, due to rising costs.

Shares in NatWest (LON:NWG) were also trading lower after the UK government announced it would be cutting its £12 billion stake in the bank over the next year. The government did not confirm the exact size of the share sales but said sales would be capped at 15% of the total volume of shares being traded in the market over the 12-month period.

On the other hand, positive earnings from IG Group (LON:IGG), AJ Bell (LON:AJBA), Moneysupermarket.Com (LON:MONY), and FirstGroup (LON:FGP) helped the FTSE 250 outperform its big brother.

GBP/USD was strong, helped by the improving risk tone in financial markets, despite high Covid infections and Brexit beginning to rear its head, again. On Wednesday the UK government outlined its plan to attempt to renegotiate part of the previously agreed Brexit agreement but the EU suggested it wouldn’t renegotiate but might be happy to enter discussions on finding a common path forward for Northern Ireland.

EUR/USD was trading broadly unchanged after the European Central Bank decision. Christine Lagarde and her clan of central bankers kept policy instruments unchanged but tweaked their guidance, following the updated strategy. The central bank said it expected to continue buying bonds at an elevated pace over the next two months, in a clear sign that tightening of policy won’t happen any time soon, despite higher inflation readings.

WTI and Brent crude futures were trading higher, again benefitting from the improving risk picture and hopes that the rising Covid cases globally won’t impact the demand recovery. Separately, the OPEC+ deal agreed at the beginning of the week may provide some certainty amid previous fears that the cartel could break down and a price war could breakout.

Bitcoin and other cryptocurrencies were relatively strong, a day after Tesla (NASDAQ:TSLA) CEO Elon Musk said the car company will “most likely” begin accepting Bitcoin as payment again. It’s not the first time that Elon Musk has said something similar, previously suggesting that Tesla would accept Bitcoin if it could be proven that the energy usage to power the network was from a majority renewable sources.

Musk also announced his space exploration company SpaceX held Bitcoin and that he personally holds Bitcoin, Ethereum and Dogecoin.

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FTSE 100 falls, midcaps jump on earnings, GBP regains lost ground, Bitcoin higher

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