FTSE extends slide as Bank governor raises ‘issues’ over negative interest rates

The index tracking the biggest shares in London fell for the second day in a row after coming off one of the best-ever starts to a year.

The FTSE 100 dropped 44.37 points, a fall of 0.7%, ending the day at 6,754.11.

Unlike recent days, when the FTSE has largely followed the ebbs and flows of global markets, it was domestic comments that set the scene on Tuesday.

Bank of England governor Andrew Bailey warned that “there are a lot of issues” with introducing negative interest rates. The tool, which is one of the ways the Bank can influence the economy, has been on the cards for months.

However, Mr Bailey’s concerns helped push sterling up by about 0.8% to 1.3622 dollars or 1.1202 euros.

Any increase in the pound is often met with an opposite force on the FTSE, as the index’s exporters are hurt.

“Just like on Monday, a session that started off quiet for the FTSE soon went south – though this time it was sterling’s fault,” said Spreadex analyst Connor Campbell.

“Well, to be more precise, Andrew Bailey’s fault, by way of the pound.”

Across the Atlantic and the English Channel, traders had s sleepy day. The main German and French indices, the Dax and Cac, were both more or less unchanged, while the Dow Jones and S&P 500 in New York lost just 0.1% of their value.

In company news, online retailer The Hut Group reported strong trading in the run-up to Christmas, sending its shares up 1%. But the news that Games Workshop had seen pre-tax profit jump by 56% in the six months to November made shareholders less happy. Its shares fell 6.7%.

Other retail news included a nearly 17% rise in sales at Kingfisher, which owns B&Q, sending its shares up 1.8%, while retail landlord Landsec looked gloomier – shares dropped 1.6% on the news that the company has only collected 65% of the rent due Christmas Day.

Two gaming companies, Playtech and Gamesys, said they could have beaten market expectations in 2020, sending their shares up 4.3% and 5.1% respectively.

Housebuilder Vistry Group’s news that it would start paying out dividends again did not impress investors. Shares dropped by 0.2%.

Meanwhile investors were more positive about IAG, even as the owner of British Airways was said to be the target of what could be the biggest ever personal data group-action claim in the UK. Shares closed up 2.5%.

The biggest risers on the FTSE 100 were IAG, up 5.05p to 157.9p, Johnson Matthey, up 86p to 2732p, Intercontinental Hotel Group, up 137p to 4876p, Whitbread, up 68p to 3095p, and Glencore, up 5.85p to 276.4p.

The biggest fallers on the FTSE 100 were Fresnillo, down 49p to 1130p, Experian, down 104p to 2729p, Hikma, down 95p to 2562p, Croda, down 200p to 6422p, and Reckitt Benckiser, down 198p to 6358p.