Housebuilders and rising pound put pressure on FTSE

London’s top shares fell on Tuesday as a rising pound put pressure on the export-heavy FTSE 100, while housebuilders and mining companies suffered.

The value of sterling jumped during the morning shortly after the UK flash PMI figures came out, far surpassing expectations by showing the best growth in the private sector for eight months.

A rising pound often puts pressure on the FSTE, as it reduces the value of the dollars that British multinationals make abroad.

By the end of the day, the index had dropped by 0.5%, closing down 36.56 points to 7,977.75.

But the sell-off on Tuesday was also largely driven from the US, where shares dropped heavily. The Dow Jones and S&P 500 were both down 1.6% shortly after markets closed in Europe.

“Worries that disinflationary winds aren’t blowing hard enough to cool hot inflation have seeped into trading, pushing stocks on Wall Street lower with the FTSE 100 also caught on the back foot,” said Susannah Streeter at Hargreaves Lansdown.

“Investors are waking up to the realisation that fresh interest rate hikes will be needed in the US – perhaps as many as three in quick succession to tame the price spiral and that’s set to send consumers more cautious.”

Poor house price figures put pressure on Persimmon, Barratt Developments and Rightmove, among others. While a bigger-than-expected drop in profits for BHP spilled over onto the shares of Anglo American and Glencore.

In Germany, the Dax index closed down 0.6% while the Cac 40 in Paris dropped 0.4%.

In company news, HSBC posted a drop in annual profits for 2022, but unveiled a strong final quarter which buoyed shares.

The global bank said that it had seen pre-tax profit rise by 90% – better than expected – to 5.2 billion dollars (£4.3 billion) in the last three months of the year.

It announced its biggest annual dividend since 2018, and plans a special dividend after it sells its Canadian arm later this year.

Investors smiled on the business, sending shares up by 4.3%.

Elsewhere, IHG, the owner of Holiday Inn and other hotel chains, said that it is benefiting from a post-Covid rebound which led to a 34% rise in revenue and a 27% jump in operating profit.

Revenue hit 3.9 billion dollars (£3.2 billion) and operating profit rose to 628 million dollars (£523 million).

On currency markets, the pound gained 0.6% by rising to 1.21 dollars.

The biggest risers on the FTSE 100 were HSBC, up 26.8p to 647.5p, Smith & Nephew, up 49p to 1,210.5p, BAE Systems, up 17.4p to 906.8p, Burberry, up 46p to 2,592p, and Frasers, up 10p to 804p.

The biggest fallers on the FTSE 100 were Anglo American, down 183.5p to 3,154p, Persimmon, down 52.0p to 1,415p, Glencore, down 16.4p to 503.3p, Prudential, down 40.5p to 1,256.5p, and Rightmove, down 17.2p to 559.4p.