FTSE records worst day in three months after interest rates hiked

After a brief respite on Wednesday, the FTSE 100 continued its downward spiral as it registered the worst day since early March.

The top index in London mirrored stock exchanges elsewhere in the world, as traders looked to the interest rate decisions taken by global central banks.

The FTSE had already been trading down heavily ahead of the Bank of England’s decision at midday to put up rates from 1% to 1.25%.

On Wednesday evening, the US Federal Reserve hiked its base rate by 0.75 percentage points, the biggest jump in nearly 30 years.

“After breaking a sixday run of declines yesterday, European markets have resumed normal service to the downside,” said CMC Markets analyst Michael Hewson.

By the time the FTSE closed it had lost 228.43 points, a 3.1% drop. It was the worst performance since March 4 – when fighting in Ukraine caused a fire at Europe’s largest nuclear power plant.

The 7,044.98 point closing score yesterday was also the lowest the FTSE has been since around the same time.

In Europe the German Dax index dropped by 3.3% while France’s Cac 40 fell 2.4%.

In New York the S&P 500 had fallen 3.2% while its Wall Street neighbour the Dow Jones lost 2.4%.

On currency markets the pound rose 0.56% to buy 1.2343 dollars and 0.24% to 1.1724 euros.

“Today’s weakness has been across the board driven by energy, financials, and consumer discretionary with disappointing updates from Asos and Boohoo Group showing that the outlook for fast fashion appears to be deteriorating even faster,” Mr Hewson said. “Both brands delivered disappointing assessments about their respective businesses, as consumers looked to pare back spending, while the underlying business struggles to maintain margins against a backdrop of rising costs.”

The biggest risers on the FTSE 100 were London Stock Exchange, up 166p to 7,254p, Segro, up 12.2p to 975.2p, Informa, up 5p to 517.6p, CocaCola HBC, up 5p to 1,770.5p, and Reckitt, up 10p to 5,972p.

European markets have resumed normal service