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FTSE slips lower as interest rate rise fears hit housing stocks

·3-min read
(PA) (PA Archive)
(PA) (PA Archive)

The FTSE 100 slipped to a fresh two-week low as concerns over major interest rate hikes weighed on trading sentiment.

Sweden’s Riksbank was the first of many central bank’s to move on interest rates this week and its decision to launch a bumper rate hike quickly unsettled the markets across Europe before the Federal Reserve and Bank of England meet.

The threat of surging interest rates particularly weighed on housebuilders, with Persimmon and Barratt tumbling, amid concerns the increases will hit mortgage demand.

London’s top flight ended the day down 44.02 points, or 0.61%, at 7,192.66.

Michael Hewson, chief market analyst at CMC Markets UK, said: “European markets initially started the day in positive territory, however the gains soon disappeared in the wake of a supersized rate hike from the Swedish Riksbank of 100 basis points, pushing their headline rate up to 1.75%.

“The size of the hike has shifted the focus back to tomorrow’s Fed rate decision and the possibility that the US central bank might do something similarly aggressive.

“This seems a stretch given that US rates are already quite a bit higher than Swedish ones, however in this case discretion appears to be the better part of valour, and markets have ratcheted lower, as rates have gone higher.”

The German Dax declined 1.03% by the end of the session and the French Cac finished 1.35% lower.

Meanwhile, sterling edged closer to the 37-year low it struck last week as the dollar strengthened once again.

The pound was down 0.09% against the dollar at 1.140 and was also 0.09% lower against the euro at 1.141 at the close.

In company news, B&Q owner Kingfisher was in the red after it reported a 30% drop in profits as the company battled higher prices for raw materials and energy and sales slowed following the pandemic DIY boom.

The FTSE 100-listed firm said its adjusted pre-tax profits plummeted by 29.5% to £472 million in the first half of the year compared with £669 million a year ago.

Shares in the DIY giant fell by 9.7p to 237.6p as a result.

Haleon, the consumer health firm spun off by GlaxoSmithKline earlier this year, finished higher after it reported a double-digit hike in revenue and profits in the group’s first set of company results.

Shares increased by 6.05p to 265.45p at the close of play.

Ocado Group was near the foot of the FTSE 100 after the retail technology firm was downgraded by analysts at HSBC due to concerns over smaller purchase sizes from customers. It closed 64.6p lower at 606.4p.

The only FTSE firm to fall further was Schroders, which tumbled by 2,090.05p to 427.95p, although this was only due to a technicality after it split each of its shares into five parts, meaning each share saw an 80% drop in value.

Elsewhere, the price of Brent crude oil decreased by 1.7% to 90.43 US dollars per barrel when the London markets closed.

The biggest risers on the FTSE 100 were Lloyds, up 1.2p to 49p, Haleon, up 6.05p to 265.45p, IAG, up 2.36p to 108.34p, Halma, up 35p to 2,035p, and Fresnillo, up 10.8p to 740.8p.

The biggest fallers on the FTSE 100 were Schroders, down 2,090.05p to 427.95p, Ocado, down 64.6p to 606.4p, Persimmon, down 93p to 1,337p, Barratt Developments, down 24p to 404.8p, and Intermediate Capital Group, down 66p to 1,146.5p