Yahoo Finance FTSE falls amid stronger pound as Bank of England increases interest rates
European stock markets tumbled into the red on Thursday as traders digested the Bank of England (BoE) doubling interest rates from 0.25% to 0.5%.
In London, the FTSE 100 (^FTSE) closed 0.7% lower on the day, held back by a somewhat firmer pound, while the CAC (^FCHI) fell 1.3% in Paris, and the Frankfurt DAX (^GDAXI) was 1.4% lower.
The Monetary Policy Committee (MPC) voted 5-4 to hike rates by a further 25bp after it put rates up in December from record lows of 0.1% to 0.25%
The rate rise is the second increase since the start of the pandemic, and marks the first back-to-back hike since 2004.
The pound also managed to erase its losses against the dollar (GBPUSD=X) on the back of the news, climbing as much as 0.4% to $1.3623, before paring back. It was also 0.3% up against the euro (GBPEUR=X) at €1.2031.
Elsewhere, the European Central Bank (ECB) decided to leave interest rates at record lows of 0% despite rising inflation in the eurozone.
In a move that was widely expected, the central bank held its deposit and main refinancing rates steady at -0.5% and 0% respectively.
It added that interest rates will not rise until projections show that inflation is sustainably at 2%. The ECB also renewed its pledge to slow asset purchases over the course of the year.
Read more: What higher interest rates means for your finances
Across the pond, the S&P 500 (^GSPC) dipped 1.3% and the tech-heavy Nasdaq (^IXIC) slumped 2% by the time of the European close. The Dow Jones (^DJI) edged 0.7% lower.
On Wednesday, US markets finished higher for the fourth straight day, however, Facebook parent company Meta Platforms (FB) plunged 23% in after-hours trading after its latest quarterly earnings did not meet Wall Street estimates.
Mark Zuckerberg, chief executive, saw his personal wealth plummet by around $24bn (£18bn) when markets opened on Thursday as the stock fell 26%.
The social media platform revealed that profits had fallen by 8% to $10.3bn in the final quarter of last year, even as revenues rose by 20% to $33.6bn. Users were spending more time with rivals such as TikTok instead.
Once the darling of the tech sector, Facebook has fallen out of favour among investors with a series of aggressive price target cuts last night," Victoria Scholar, head of investment and Interactive Investor, said.
"As competition for eyeballs intensifies and as Facebook users switch to products which are harder to monetise such as Reels, the company is faced with a hard graft ahead.
"Following the indiscriminate gains over the past 22 months, the environment has turned into a stock pickers market as investors determine the winners from the losers and it looks like Meta will struggle to come out on top."
Watch: Facebook sees first-ever drop in daily active users as owner Meta takes $200bn share hit
Shares were mixed in Asia on Thursday as the latest batch of company earnings reports kept investors in a buying mood.
In Japan, the Nikkei (^N225) fell 1% while Seoul's Kospi (^KS11) jumped 1.7%, catching up on earlier gains elsewhere after markets in South Korea reopened from holidays. Singapore's benchmark (^STI) also gained 1.9% on the day.
Markets in China remained closed for Lunar New Year holidays.
Watch: What is inflation and why is it important?
