FTSE 100 drops as interest rate concerns weigh on housebuilders

London’s markets slid in a gloomy afternoon session amid concerns over persistent inflation. The FTSE 100 had a cautious morning of trading but quickly dropped to its lowest point this month after hotter-than-expected US Consumer Price Index (CPI) inflation figures.

The data suggested hopes of interest rate reductions soon could be premature and particularly dented housebuilders amid concerns about the mortgage market.

London’s top index moved 0.81 per cent, or 61.41 points, lower to finish at 7,512.28, with Taylor Wimpey, Barratt Developments and Persimmon all notable fallers.

Axel Rudolph, senior market analyst at IG, said: “A higherthan-expected US CPI print provoked a sell-off in global equities as rate cut expectations are pushed back.

“January consumer price inflation falling less than expected was enough of a catalyst to cut the equity rally short, push yields and the US dollar to two-month highs.

“Hopes for a Federal Reserve March rate cut have all but disappeared with the market now pricing in a 53 per cent probability of a first cut being seen in June.”

Key stateside markets, such as the Dow Jones and S&P 500, dropped into the red as a result.

In mainland Europe, concerns over the inflation picture also drove weak sentiment, with traders on edge ahead of inflation data for the UK and other key economies still to come.

The German Dax index was down 0.92 per cent at the close and the Cac 40 closed down 0.84 per cent.

Meanwhile, sterling failed to keep up with the US dollar, which was boosted by the 3.9 per cent US core inflation reading for January.

The pound was down 0.18 per cent at 1.260 US dollars but was 0.35 per cent higher at 1.175 euro at market close in London.

In company news, shares in Tui edged lower despite the travel giant cutting its losses for the latest quarter.

The holiday operator, which also urged its shareholders to vote to abandon the company’s London listing and focus purely on Germany, said its pre-tax loss was cut from 272.6 million euro (£232.3 million) in the final three months of 2022 to 103.1 million euros (£87.9 million) in the same period in 2023.

Shares in the company were down 1p to 578.5p at the end of trading.

The biggest risers on the FTSE 100 were Astrazeneca, up 99p to 9,600p, GSK, up 15.4p to 1,641.8p, Centrica, up 1.1p to 135.55p, HSBC, up 2.1p to 610.5p, and Anglo American, up 4.4p to 1,756p.

The biggest fallers on the FTSE 100 were Barratt Developments, down 22.4p to 466.1p, Taylor Wimpey, down 6.5p to 141.45p, Fresnillo, down 21.6p to 471.8p, Entain, down 43.2p to 973.8p, and Persimmon, down 57.5p to 1,361.5p.