FTSE drops further as interest rate woes continue
nother lacklustre session on Friday concluded a week of consecutive daily declines for the FTSE as worries over interest rates continued to hamper London trading.
Housebuilders such as Persimmon, Barratt and Berkeley were again among the fallers as the markets predicted that UK interest rates could peak at 6.25% after the Bank of England’s larger-than-expected hike on Thursday.
The move also compounded growing concerns over a recession and potential slowdown in consumer spending.
EU and UK early economic data for June also missed expectations, pressing down on sentiment
Axel Rudolph, senior market analyst at IG, said: “Disappointing EuroZone flash manufacturing and services PMI led to further selling in European equity markets which ended the week in the red after five consecutive days of falling prices.
“The FTSE 100 is trading back in negative territory year-to-date and is fast approaching its March banking crisis low as worries of a UK recession due to rapidly rising interest rates mount.”
The FTSE 100 moved 0.54%, or 40.16 points, lower to finish at 7,461.87.
Elsewhere, the German markets were also impacted by sharp slump in Siemens shares after the company pulled its full year guidance due to problems in its Spanish Gamesa operation.
Germany’s Dax index fell by 1.07% and the Cac 40 closed down 0.65%.
Across the Atlantic, the US experienced another weak opening as European trading caution spilled over.
Meanwhile in currency, traders found solace in the dollar once again during a shaky session, to the expense of sterling.
The pound was down 0.25% to 1.271 US dollars and had increased 0.39% to 1.167 euros at market close in London.
In company news, GSK was the strongest performer on the FTSE 100 after it settled a lawsuit relating to discontinued heartburn drug Zantac, which was alleged to be linked to cancer.
Shares in GSK jumped by 66.2p to 1,425.2p at the close of trading after it said an upcoming trial was cancelled – but that it does not admit liability.
Hotel Chocolat left a bitter taste for shareholders after it warned on profits for the second time in just two months.
The retailer said it is making “excellent progress” in cutting costs, but that it will be slower than previously thought and now expects to report a loss for the 2023 financial year. Shares fell 24p to 115p.
Ocado swung lower as it recoiled slightly from the surge in value it witnessed on Thursday.
The online retail business had previously shot higher over fresh speculation that it could be takeover target for technology giants such as Amazon.
Shares in Ocado were down 30.2p at 537.6p.
The price of oil continued to decline after Thursday’s steep fall, as Europe’s poor flash PMI data and recession concerns impacted sentiment over demand.
A barrel of Brent crude fell by 1.17% to 73.27 US dollars at the time markets were closing in London.
The biggest risers on the FTSE 100 were GSK, up 66.2p at 1,425.2p, Croda International, up 128p at 5,580p, Convatec, up 3.6p at 210.4p, BAT, up 36p at 2,625.5p, and Vodafone, up 0.77p at 72.67p.
The biggest fallers of the session were Ocado, down 30.2p at 537.6p, DS Smith, down 12.3p at 268.1p, IAG, down 6.9p at 158.95p, Persimmon, down 44.5p at 1,059p, and JD Sports, down 5.95p at 143.8p.