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Wall Street mixed as FTSE 100 closes lower on Fed and BoE hawkish tone

A look at how the major markets are performing on Thursday

Pedro Goncalves
·Finance Reporter, Yahoo Finance UK
·2-min read
FTSE U.S. Federal Reserve Chair Jerome Powell testifies before a House Financial Services Committee hearing on
FTSE and Wall Street lower as investors await a second day of testimony on Capitol Hill from Federal Reserve Chair Jerome Powell. Photo: Jonathan Ernst/Reuters (Jonathan Ernst / reuters)

The FTSE 100 and European stocks plunged this Thursday following of the Bank of England’s decision to hike interest rates to 5% amid persistent inflation.

The FTSE 100 (^FTSE) lost 0.76% to close at 7,502 points, while the CAC 40 (^FCHI) in Paris slipped 0.90% to 7,195 points. In Germany, the DAX (^GDAXI) fell 0.24% to 15,984.

US stocks were mixed as a wave of hawkish central-bank hikes dampened spirits ahead of Federal Reserve Chair Jerome Powell's second day of testimony to Congress.

The Dow Jones (^DJI) lost 0.13% to 33,907 points. The S&P 500 (^GSPC) was muted at 4,365 points and the tech-heavy NASDAQ (^IXIC) rose 0.43% to 13,560.

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Back in London, the Bank’s monetary policy committee decided to raise its benchmark rate from 4.5% to 5%, an increase of half a percentage point.

This is the 13th increase in UK interest rates in a row, going back to December 2021.

Financial markets are now pricing in that UK interest rates will soar as high as 6% by December after inflation stuck at 8.7% in the year to May. This is up from current levels of 4.5%.

The decision comes with stock markets already under pressure after Federal Reserve chair Jerome Powell yesterday signalled more rate hikes to come in the United States.

Watch: How does inflation affect interest rates?

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