London close: Stocks fall further ahead of Fed minutes

London stocks were still in the red by the close on Wednesday, as worries about further rate hikes dented sentiment ahead of the release of the latest FOMC minutes.

The FTSE 100 ended the session down 0.59% at 7,930.63, and the FTSE 250 was off 0.86% at 19,680.29.

Sterling was also below the waterline, last down 0.3% on the dollar at $1.2070, and weakening 0.14% against the euro to change hands at €1.1357.

“A negative tone continues across the board this afternoon, although it is not as dramatic as yesterday’s selling,” said IG chief market analyst Christ Beauchamp.

“Investors are clearly hoping that the Fed minutes will rescue them from this outbreak of bearishness over interest rates, but given the data we’ve had since then the minutes might not be able to do much to retrieve the situation.

“European markets have fallen more than their US peers this afternoon, but are in a much better position overall, and seem to provide the better risk-reward outlook heading into March.”

In economic news, German inflation rose as expected in January amid higher energy prices, according to the German federal statistics office, Destatis.

Consumer prices, harmonised to compare with other EU countries, were up 9.2% in January on the same month a year earlier, in line with the provisional estimate.

On the month, harmonised consumer prices were 0.5% higher, also in line with the initial estimate.

Looking on a non-harmonised basis, consumer prices were up 8.7% on the year and 1.0% on the month, both in line with the provisional estimates.

The figures showed that energy inflation rose to 23.1% in January from 20.3% in December as the one-off fiscal support package ended.

Food inflation was meanwhile steady at 20.2%.

“Following a slowdown at the end of last year, the inflation rate thus remains at a high level,” said Ruth Brand, president of Destatis.

“We are observing price rises for many goods and, to an increasing degree, also for services.”

Still in Germany, business sentiment in the country improved again in February, according to a survey from the Ifo Institute.

The business climate index rose to 91.1 from 90.1 in January, coming in just a touch below consensus expectations of 91.2.

It marked the fifth consecutive monthly increase in the index.

Meanwhile, the expectations gauge ticked up to a one-year high of 88.5 in February from 86.4 the month before, while the current situation index dipped to 93.9 from 94.1.

“The German economy is gradually working its way out of a period of weakness,” said Ifo Institute president Clemens Fuest.

Investors were now looking to the publication of the Federal Open Market Committee’s most recent meeting minutes in the US, due at 1900 GMT.

On London’s equity markets, Rio Tinto Group lost 3.56% after it halved its dividend as profits slumped by more than a third due to weaker iron ore prices on the back of slowing demand from China and higher costs.

Miners more broadly were under pressure, with Antofagasta down 2.79%, Glencore off 1.83% and Anglo American losing 2.17%.

“The risk-off mentality explains why miners were among the biggest fallers,” said Russ Mould, investment director at AJ Bell.

“An assumption that rates could continue to rise theoretically raises the risk of more damage to the economy, and commodity producers’ fortunes are highly sensitive to economic activity.”

Georgia-based TBC Bank Group tumbled 7.54% after the release of its full-year results.

Elsewhere, InterContinental Hotels Group was knocked 1.16% lower by a downgrade to ‘hold’ at Deutsche Bank.

Luxury fashion house Burberry Group slid 4.32% by the close, with CMC Markets analyst Michael Hewson noting that "some lukewarm reaction to the new fashion line from creative designer Daniel Lee, prompted some profit taking".

Engine maker Rolls-Royce Holdings was in the red by 2.15% ahead of its full-year results on Thursday.

On the upside, Lloyds Banking Group reversed earlier losses to close up 0.57% after reporting flat annual profits with higher net income and lower costs offset by impairment charges due to the worsening economic outlook.

The bank said full-year pre-tax profits came in at £6.9bn and added that it would start another £2bn share buyback.

Net income rose 14% to £18bn and impairment charges for potential bad debts surged to £1.5bn compared with a release in 2021 of £1.3bn.

The dividend was lifted to 2.4p a share from 2p.

Elsewhere, West End landlords Capital & Counties Properties and Shaftesbury were mixed, respectively rising 1.14% and falling 1.53%, after the Competition and Markets Authority cleared their £3.5bn merger.

The merger was now expected to complete on 6 March.

Both firms announced last June that they had agreed an all-share merger to create a combined group with a portfolio valued at around £5bn.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk and Frank Prenesti.

Market Movers

FTSE 100 (UKX) 7,930.63 -0.59%
FTSE 250 (MCX) 19,680.29 -0.86%
techMARK (TASX) 4,625.36 -0.41%

FTSE 100 - Risers

Relx plc (REL) 2,552.00p 2.45%
Rentokil Initial (RTO) 518.20p 1.89%
Reckitt Benckiser Group (RKT) 5,820.00p 1.75%
Coca-Cola HBC AG (CDI) (CCH) 2,140.00p 1.52%
Compass Group (CPG) 1,953.00p 1.48%
NATWEST GROUP (NWG) 283.60p 1.43%
BT Group (BT.A) 140.85p 1.11%
Diageo (DGE) 3,610.50p 0.89%
Hargreaves Lansdown (HL.) 864.60p 0.84%
Johnson Matthey (JMAT) 2,181.00p 0.83%

FTSE 100 - Fallers

Burberry Group (BRBY) 2,480.00p -4.32%
Rio Tinto (RIO) 5,983.00p -3.56%
Antofagasta (ANTO) 1,674.00p -2.79%
Anglo American (AAL) 3,085.50p -2.17%
Rolls-Royce Holdings (RR.) 107.62p -2.15%
BP (BP.) 539.40p -1.98%
Glencore (GLEN) 494.10p -1.83%
Scottish Mortgage Inv Trust (SMT) 710.00p -1.83%
HSBC Holdings (HSBA) 636.10p -1.76%
Endeavour Mining (EDV) 1,745.00p -1.75%

FTSE 250 - Risers

Quilter (QLT) 93.38p 2.75%
Cranswick (CWK) 3,070.00p 2.74%
Just Group (JUST) 86.85p 2.72%
Wood Group (John) (WG.) 154.70p 2.45%
Genus (GNS) 2,704.00p 2.04%
Capital & Counties Properties (CAPC) 124.40p 1.14%
Digital 9 Infrastructure NPV (DGI9) 79.80p 1.01%
Discoverie Group (DSCV) 835.00p 0.97%
IP Group (IPO) 63.30p 0.88%
Spectris (SXS) 3,143.00p 0.83%

FTSE 250 - Fallers

TBC Bank Group (TBCG) 2,330.00p -7.54%
Hunting (HTG) 310.00p -5.49%
Domino's Pizza Group (DOM) 294.60p -5.39%
PureTech Health (PRTC) 214.00p -4.68%
Currys (CURY) 75.75p -4.05%
Watches of Switzerland Group (WOSG) 840.00p -4.00%
HGCapital Trust (HGT) 353.50p -3.42%
TUI AG Reg Shs (DI) (TUI) 166.70p -3.14%
Tullow Oil (TLW) 32.94p -3.12%
Molten Ventures (GROW) 367.00p -3.01%