Fears over US interest rate rises leave FTSE in red
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%.