Fears over US in­ter­est rate rises leave FTSE in red

The Herald - - BUSINESS -

THE FTSE 100 ended the week in the red as con­cerns over the prospect of ris­ing US in­ter­est rates and the stand-off be­tween Rome and Brus­sels con­spired to hit stocks.

Lon­don’s top tier closed down 35.34 points, or 0.49%, at 7,105.34.

It came fol­low­ing the US Fed­eral Re­serve meet­ing, where pol­i­cy­mak­ers sig­nalled that in­ter­est rate in­creases are on the cards.

David Mad­den, mar­ket an­a­lyst at CMC, said: “Traders are wor­ried about in­ter­est rate rises from the Fed, and the po­lit­i­cal sit­u­a­tion in Italy.

“The US cen­tral bank an­nounced that ad­di­tional in­ter­est rate rises are in the pipe­line, and this has soured sen­ti­ment.

“Rome and Brus­sels are at log­ger­heads over the pro­posed bud­get. Italy’s econ­omy min­is­ter, Gio­vanni Tria, said the EU’S pro­posal to re­duce the deficit would be eco­nomic ‘sui­cide’.”

In stocks, SSE was in the dol­drums amid fears its merger with ri­val npower has been left “in a sham­bles” af­ter be­ing de­layed due to the in­com­ing cap on de­fault tar­iff prices.

The pair said they are rene­go­ti­at­ing the terms of their tie-up as a re­sult of the cap, which is set to see the deal de­layed.

En­ergy ex­perts at Jef­feries said the merger was left in a “sham­bles”, with wor­ries for the fu­ture vi­a­bil­ity of the deal, which aims to cre­ate the UK’S sec­ond-big­gest gas and elec­tric­ity sup­plier.

The two firms had been hop­ing to seal the merger of their re­tail op­er­a­tions in the first quar­ter of 2019 af­ter it was re­cently given the green light by the com­pe­ti­tion watch­dog. SSE shares were down 30p at 1,152.5p at the close.

In­forma shares were in the as­cen­dancy af­ter the events busi­ness booked un­der­ly­ing rev­enue growth of 3.9 per cent in the first 10 months of the year af­ter ac­quir­ing ri­val UBM.

This puts the com­pany on track to meet its un­der­ly­ing rev­enue growth tar­get of 3.5%. In­forma also con­firmed it is on track to make sav­ings of at least £50 mil­lion in 2019, with more syn­er­gies pen­cilled in.

In­vestors lapped up the news, send­ing shares to the top of the FTSE 100, clos­ing up 18.4p at 710.6p.

Ster­ling, mean­while, took a dive off the back of more Brexit un­cer­tainty and the res­ig­na­tion of Jo John­son from Theresa May’s Gov­ern­ment af­ter call­ing for the pub­lic to be given a sec­ond ref­er­en­dum on Bredit.

The British cur­rency was down 0.6% ver­sus the US dol­lar at 1.297. Against the euro, the pound was trad­ing down 0.3% at 1.146.

In Eu­rope, Ger­many’s DAX was up a mea­gre 0.02% and France’s CAC was down 0.48%.

A bar­rel of Brent crude was trad­ing at $69, a de­cline of 1.4%.

The big­gest ris­ers on the FTSE 100 were In­forma, up 18.4p at 710.6p; Easy­jet, up 26p at 1,254p; Im­pe­rial Brands, up 56p at 2,750p; and Na­tional Grid, up 15.7p at 855.7p.

The big­gest fall­ers on the FTSE 100 were Burberry, down 91p at 1,773.5p; Antofa­gasta, down 39.8p at 778.2p; DS Smith, down 18.2p at 357.8p; and Fres­nillo, down 42p at 861p. WALL Street’s three ma­jor stock in­dexes lost ground yes­ter­day, af­ter a week of re­cov­ery from the Oc­to­ber sell-off, as oil prices fell fur­ther and more ev­i­dence of a slow­ing Chi­nese econ­omy was re­ported.

Oil prices fell nearly one per cent, and have now seen the long­est stretch of daily de­clines since 1984, on ris­ing global sup­ply and ev­i­dence of a slow­ing world econ­omy.

The US for­mally im­posed puni­tive sanc­tions on Iran this week, but granted eight coun­tries tem­po­rary waivers al­low­ing them to keep buy­ing oil from the Is­lamic Repub­lic.

“Oil is spook­ing the mar­ket. If oil prices are go­ing to go lower that’s an­other sign that the global econ­omy is go­ing to slow its growth,” said Chris Zac­carelli, chief in­vest­ment of­fi­cer at In­de­pen­dent Ad­vi­sor Al­liance in Char­lotte, North Carolina.

The Dow Jones In­dus­trial Av­er­age fell 201.92 points to 25,989.3, the S&P 500 lost 25.82 points to 2,781.01 and the Nas­daq Com­pos­ite dropped 123.98 points to 7,406.90.

The S&P en­ergy in­dex dropped 0.4% af­ter fall­ing 2.2% in the pre­vi­ous day’s ses­sion

Shares in to­bacco com­pa­nies fell af­ter an of­fi­cial said that the US Food and Drug Ad­min­is­tra­tion would is­sue a ban on the sale of fruit and sweets flavoured elec­tronic cig­a­rettes in con­ve­nience stores and gas sta­tions.

Al­tria Group ended 2.98% lower while British Amer­i­can To­bacco’s U.S. shares fell 4.2%.

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