London stocks were still a little weaker by midday on Thursday after the US Federal Reserve signalled that it could hike interest rates earlier than expected.
The FTSE 100 was down 0.4% at 7,153.38.
CMC Markets analyst Michael Hewson said: “US markets closed lower yesterday after the Fed threw the market a bit of a curve ball, as the timeline for a possible rise in interest rates was brought forward, with the consensus for a possible two hikes by the end of 2023, much sooner than the previous 2024, although the underlying tone remained cautious.
“The Federal Reserve also unexpectedly nudged higher the interest rate on excess reserves (IOER) by 5 basis points to 0.15% in a sign that perhaps there was a degree of concern about rising inflation expectations. The central bank also upgraded its growth forecasts to 7% for this year, along with its core inflation forecast to 3%, a sharp adjustment up from the previous 2.2%.
“This unexpectedly hawkish tilt saw yields on US government bonds rise sharply, while US stocks rolled over, slipping to the downside, though the eventual losses were fairly well contained.”
In equity markets, miners fell as metals prices retreated, with Anglo American, BHP, Antofagasta and Glencore all trading lower.
Shares in safety equipment specialist Halma slumped after Berenberg said in a note that the stock’s valuation “remains a hurdle”.
Dr Martens was also in the red as the iconic boot brand reported a jump in full-year revenue in its first results as a listed company but a drop in profit due to costs associated with the float.
On the upside, banks fared well, with NatWest, HSBC, Barclays and Lloyds all gaining.
Premier Inn owner Whitbread rallied as it maintained guidance despite an extension of the UK government’s lockdown, forecasting strong summer demand in coastal destinations.
Travel and leisure stocks were higher following reports that fully vaccinated Britons could be exempt from quarantine after an amber list holiday. British Airways and Iberia parent IAG, budget airlines easyJet and Wizz, travel company Tui, cruise operator Carnival, Upper Crust owner SSP, engine maker Rolls-Royce, InterContinental Hotels and WH Smith were all higher.
EasyJet was also boosted by news of 12 new UK domestic services as it looks to capitalise on demand for staycations.
Trainline advanced after it posted a 324% jump in first-quarter sales as commuter travel started to recover as Covid lockdowns eased.
Market Movers
FTSE 100 (UKX) 7,153.38 -0.44%
FTSE 250 (MCX) 22,506.86 -0.49%
techMARK (TASX) 4,475.16 -0.37%
FTSE 100 – Risers
International Consolidated Airlines Group SA (CDI) (IAG) 203.00p 3.23%
Standard Chartered (STAN) 498.70p 2.76%
Whitbread (WTB) 3,376.00p 2.61%
Barclays (BARC) 181.52p 2.48%
NATWEST GROUP PLC ORD 100P (NWG) 210.20p 2.44%
HSBC Holdings (HSBA) 448.60p 2.41%
Rolls-Royce Holdings (RR.) 112.52p 2.29%
Lloyds Banking Group (LLOY) 48.64p 1.99%
BT Group (BT.A) 203.10p 1.45%
InterContinental Hotels Group (IHG) 5,184.00p 1.33%
FTSE 100 – Fallers
Halma (HLMA) 2,704.00p -5.16%
Hikma Pharmaceuticals (HIK) 2,423.00p -3.54%
Intermediate Capital Group (ICP) 2,176.00p -3.42%
3i Group (III) 1,217.00p -3.26%
Evraz (EVR) 606.60p -2.88%
Polymetal International (POLY) 1,605.00p -2.85%
Anglo American (AAL) 2,886.50p -2.60%
Antofagasta (ANTO) 1,420.00p -2.34%
SSE (SSE) 1,534.00p -2.29%
Spirax-Sarco Engineering (SPX) 13,300.00p -2.17%
FTSE 250 – Risers
Ultra Electronics Holdings (ULE) 2,246.00p 5.55%
easyJet (EZJ) 991.40p 4.31%
TUI AG Reg Shs (DI) (TUI) 410.60p 3.79%
Virgin Money UK (VMUK) 208.70p 3.62%
Trainline (TRN) 279.60p 3.10%
Aston Martin Lagonda Global Holdings (AML) 2,017.00p 3.04%
WH Smith (SMWH) 1,780.50p 2.92%
Morrison (Wm) Supermarkets (MRW) 180.45p 2.18%
Hiscox Limited (DI) (HSX) 835.40p 2.13%
Babcock International Group (BAB) 302.40p 1.92%
FTSE 250 – Fallers
Dr. Martens (DOCS) 462.00p -6.67%
Ferrexpo (FXPO) 421.60p -4.53%
UK Commercial Property Reit Limited (UKCM) 76.20p -3.54%
Hochschild Mining (HOC) 164.90p -3.34%
Bytes Technology Group (BYIT) 461.60p -3.23%
Fidelity China Special Situations (FCSS) 394.50p -3.07%
Mitie Group (MTO) 71.40p -2.86%
Electrocomponents (ECM) 1,007.00p -2.80%
Kainos Group (KNOS) 1,339.00p -2.76%
Diploma (DPLM) 2,824.00p -2.75%
