London stocks were down but off earlier lows by midday on Thursday, as investors digested hawkish Federal Reserve minutes.
The FTSE 100 was 0.5% lower at 7,476.96.
Overnight, the latest minutes form the Fed revealed that it may raise rates sooner than expected to tackle rising inflation.
Neil Wilson, chief market analyst at Markets.com, said: “Details from its December policy meeting indicate FOMC members are leaning towards more hikes and embarking on balance sheet reduction quicker than previously expected. This accelerated the rollover of the big speculative tech positioning that we have seen lately.”
On home shores, a survey released earlier showed growth in the services sector eased to a 10-month low in December as the Omicron Covid variant took its toll.
The IHS Markit/CIPS services purchasing managers’ index fell to 53.6 from 58.5 in November, hitting its lowest level since February. Still, it remained above the 50.0 mark that separates contraction from expansion.
The survey found that travel, leisure and hospitality businesses overwhelmingly cited a slump in activity due to tighter pandemic restrictions and cancelled events during the festive period.
Tim Moore, economics director at IHS Markit, said: “December data revealed a severe loss of momentum for the UK economy as many customer-facing businesses experienced a drop in demand due to escalating Covid-19 cases. Total new orders in the service sector increased at the weakest pace for 10 months. Mass cancellations of bookings in response to the Omicron variant led to a slump in consumer spending on travel, leisure and entertainment. Survey respondents also noted that renewed pandemic restrictions had slowed the recovery in business services.”
In equity markets, clothing retailer Next fell as it upped full-year profits guidance and announced a special dividend after Christmas sales exceeded expectations, but warned over the impact of inflation on sales in 2022.
Bakery chain Greggs was also in the red as it said the full-year outcome looked set to be “slightly ahead” of its previous expectations, and announced that retail and property director Roisin Currie will succeed long-serving chief executive Roger Whiteside.
Dr Martens tumbled after private equity firm Permira sold 65m shares in the iconic bootmaker in a placing.
Discount retailer B&M European Value Retail was also weaker despite saying that full-year profits were set to be above analyst expectations following a “strong” performance over the Christmas period.
On the upside, banks were among the top performers, with Standard Chartered, Lloyds, HSBC and NatWest all higher.
Market Movers
FTSE 100 (UKX) 7,476.96 -0.53%
FTSE 250 (MCX) 23,540.94 -0.97%
techMARK (TASX) 4,506.32 -1.48%
FTSE 100 – Risers
Standard Chartered (STAN) 473.90p 2.98%
International Consolidated Airlines Group SA (CDI) (IAG) 165.24p 2.75%
Lloyds Banking Group (LLOY) 51.76p 2.13%
HSBC Holdings (HSBA) 476.95p 1.85%
NATWEST GROUP PLC ORD 100P (NWG) 240.80p 1.43%
ITV (ITV) 116.10p 1.40%
WPP (WPP) 1,174.50p 1.25%
Compass Group (CPG) 1,719.00p 1.12%
Barclays (BARC) 199.82p 0.96%
BAE Systems (BA.) 552.20p 0.95%
FTSE 100 – Fallers
Aveva Group (AVV) 3,190.00p -4.12%
Experian (EXPN) 3,426.00p -4.09%
Relx plc (REL) 2,253.00p -4.09%
Halma (HLMA) 3,011.00p -3.96%
Spirax-Sarco Engineering (SPX) 15,460.00p -3.95%
Auto Trader Group (AUTO) 710.40p -3.43%
JD Sports Fashion (JD.) 212.20p -3.11%
Scottish Mortgage Inv Trust (SMT) 1,211.00p -3.08%
Dechra Pharmaceuticals (DPH) 4,656.00p -2.92%
Croda International (CRDA) 9,522.00p -2.92%
FTSE 250 – Risers
Network International Holdings (NETW) 295.60p 3.94%
Capricorn Energy (CNE) 199.70p 3.26%
Babcock International Group (BAB) 335.60p 2.60%
Plus500 Ltd (DI) (PLUS) 1,429.50p 2.44%
Cineworld Group (CINE) 39.49p 2.39%
Aston Martin Lagonda Global Holdings (AML) 1,387.50p 2.32%
SSP Group (SSPG) 261.40p 2.15%
WH Smith (SMWH) 1,597.00p 2.11%
Wizz Air Holdings (WIZZ) 4,814.00p 2.08%
Marks & Spencer Group (MKS) 254.80p 2.04%
FTSE 250 – Fallers
Dr. Martens (DOCS) 385.60p -8.50%
Liontrust Asset Management (LIO) 2,035.00p -4.68%
Computacenter (CCC) 2,758.00p -4.57%
BB Healthcare Trust (Red) (BBH) 186.80p -4.40%
Impax Environmental Markets (IEM) 524.00p -4.38%
Softcat (SCT) 1,650.00p -4.29%
Auction Technology Group (ATG) 1,340.00p -4.29%
Baillie Gifford Shin Nippon (BGS) 207.00p -4.17%
Helios Towers (HTWS) 162.80p -4.12%
Brewin Dolphin Holdings (BRW) 359.00p -3.75%
