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FTSE 100 drifts lower amid interest rate concerns

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London markets drifted lower in trading on Thursday (Ian West/PA) (PA Archive)
London markets drifted lower in trading on Thursday (Ian West/PA) (PA Archive)

London’s top markets slipped back after better-than-expected economic growth figures renewed speculation that there could be an increase in interest rates.

Markets had been in positive territory at the start of the session but an announcement by the Office for National Statistics (ONS) that GDP had increased by 5.5% in the quarter to June, ahead of the previous 4.8% estimate, sparked rates chatter that affected sentiment.

The FTSE 100 closed 21.74 points, or 0.31%, lower at 7,086.42 on Thursday.

Michael Hewson, chief market analyst at CMC Markets UK, said: “After starting on the front foot today, markets in Europe have seen the morning gains slowly slip away in a manner that was pretty much reflective of the wider uncertainty that has been characteristic of sentiment for most of this quarter.

Virgin Money has announced plans to close 31 stores (Rui Vieira/PA) (PA Wire)
Virgin Money has announced plans to close 31 stores (Rui Vieira/PA) (PA Wire)

“We’ve seen swings in both directions as we look set to finish what has been a mixed month very much on the back foot, with the Dax set to post its worst month this year. The FTSE 100 has managed to shrug off most of its losses to finish close to where it finished at the end of August.”

Elsewhere in Europe, the major markets also closed in the red.

The German Dax decreased by 0.35% and the French Cac moved 0.27% lower.

In the US, the markets were mixed as the tech-focused Nasdaq had a rebound after a heavy drop in the previous session, but the Dow Jones tipped lower.

Meanwhile, sterling had an initial respite from the positive ONS reading following a recent dip, but lost steam later in the day.

The pound was down 0.13% versus the US dollar at 1.346 and was flat against the euro at 1.163.

In company news, Oxford Nanopore soared on its first day of conditional trading after floating on the London Stock Exchange’s main market.

The life sciences business floated with a market value of around £3.4 billion, but saw this surge to more than £4.8 billion on Thursday amid strong appetite for biotech stocks, which have been bolstered by the pandemic.

It closed 187.6p higher at 612.6p, while listed investor IP Group rose 4p to 140p.

Virgin Money shares slipped after the banking group announced plans to close 31 stores, with the loss of around 112 jobs.

Bosses said the move followed more customers switching to online banking during the pandemic, accelerating a long-term shift away from bricks-and-mortar stores.

It was down 8.8p at 204.4p at the close of trading.

Elsewhere, online fast-fashion firm Boohoo plunged after it said its profits slid on the back of soaring shipping costs.

It fell by 38.7p to 217.3p, with the statement also unnerving Asos shareholders, meaning its stock moved 241p lower to 3,002p.

The price of oil continued its slump after reaching its highest since 2018 earlier this week, before an increase in oil output on Friday.

Brent crude decreased by 0.1% to 78.57 dollars per barrel.

The biggest risers on the FTSE 100 were Evraz, up 17.6p at 594.4p, Anglo American, up 66p at 2,622.5p, Fresnillo, up 16.2p at 781.4p, and Polymetal, up 25p at 1,258p.

The biggest fallers of the day were British American Tobacco, down 132.5p at 2,604p, IAG, down 8.18p at 178.5p, Royal Mail, down 15.8p at 421.2p, and Flutter, down 475p at 14,680p.

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