London close: Stocks fall on renewed interest rate fears

London's stock market endured a blow on Thursday, with investors responding to fears of forthcoming rate hikes by the US Federal Reserve as well as the latest American employment data.

The FTSE 100 closed down 2.17% at 7,280.50, while the FTSE 250 was hit even harder, ending the day down 2.59% at 17,916.46.

In currencies, sterling was last up 0.19% on the dollar to trade at $1.2728, while it managed gains of 0.02% against the euro to change hands at €1.1705.

"The FTSE 100 has been assailed on all sides today," said IG chief market analyst Chris Beauchamp.

"Commodity prices are down as the dollar strengthens, but it is the wave of expectations that UK interest rates will go even higher than previously thought that has really done the damage.

"While the calls for rates to hit 7% seem a little overeager, they do have further to go, diminishing the already limited-appeal of the FTSE 100 for income hunters."

UK construction sector takes a hit, as US jobless claims rise

In economic news, a prominent survey revealed a significant dip in construction activity across the UK for June, marking a turn in fortunes for an industry that had mostly been expanding over the past five months.

The S&P Global/CIPS UK Construction Purchasing Managers’ Index (PMI), which provides a measure of monthly construction activity, fell to 48.9 in June from 51.6 in May.

A score above 50 implies growth, while one below indicates a contraction, marking it as the first shrinkage in construction output in five months.

The downturn was more pronounced in the housebuilding sector, as increased mortgage rates bit into the market.

Construction companies reported a dramatic decline in new orders, the first drop since the beginning of the year.

Housing work saw the steepest drop, plunging to 39.6 in June from 42.7 in May, marking the worst rate since May 2020.

Conversely, civil engineering emerged as the best-performing sub-sector with a score of 53.1, followed by commercial building at 53.

Simultaneously, the employment index took a hit, falling to 50.4 from 52.6 in May, reflecting potentially more challenging times ahead for construction workers.

On the other side of the Atlantic, US unemployment data also pointed to a mixed picture. In the week ended 1 July, the Department of Labor reported an increase in initial jobless claims by 12,000, reaching a total of 248,000, closely matching economists' predicted rise of 245,000.

That was an upward revision from the preceding week's figures, which were adjusted down by 3,000 to 236,000.

The four-week moving average, a measure designed to iron out short-term fluctuations, decreased by 3,500 to 253,250.

Meanwhile, secondary jobless claims, referring to repeated unemployment filings, saw a drop of 13,000, landing at 1.720 million for the week that ended on 24 June.

Equities struggle despite positive forecasts and ratings

On London's equity markets, Ocado Group dropped 3.52% after Morgan Stanley lowered its price target for the shares from 430p to 390p, anticipating the company's forthcoming first-half results.

Currys, a leading electrical retailer, witnessed a sharp fall of 9.67%.

The company cancelled its final dividend due to an uncertain outlook and dwindling annual profits, mostly attributed to underperformance in its Nordics division.

However, the overall profit figures came within the higher range of the company's guidance.

Workspace Group, a major office provider, saw its shares dip by 4.97%.

The decline came despite the company reporting an increase in first-quarter rents due to resilient demand.

It was attributed to the company trading ex-dividend, implying shareholders as of now are not eligible for the next round of dividend payments.

Other companies trading ex-dividend today were Next and JD Sports.

In other movements, Smiths Group shares slipped by 0.85%, despite an upgrade from RBC Capital Markets, which lifted the rating to 'sector perform' from 'underperform'.

Lastly, both packaging companies Smurfit Kappa and Mondi experienced a fall, registering declines of 1.36% and 1.47% respectively.

The falls came on the heels of JPMorgan upgrading both companies to 'overweight' from 'neutral'.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,280.50 -2.17%
FTSE 250 (MCX) 17,916.46 -2.59%
techMARK (TASX) 4,297.68 -2.01%

FTSE 100 - Risers

United Utilities Group (UU.) 947.20p 1.54%
Tesco (TSCO) 249.30p 0.20%
Severn Trent (SVT) 2,451.00p 0.04%
Sainsbury (J) (SBRY) 268.80p -0.44%
Sage Group (SGE) 904.20p -0.46%
Rentokil Initial (RTO) 599.80p -0.46%
National Grid (NG.) 1,020.00p -0.73%
Smiths Group (SMIN) 1,584.00p -0.85%
Centrica (CNA) 121.90p -0.93%
Hiscox Limited (DI) (HSX) 1,056.00p -0.94%

FTSE 100 - Fallers

Glencore (GLEN) 432.75p -5.50%
Next (NXT) 6,582.00p -5.35%
Antofagasta (ANTO) 1,391.50p -5.34%
Flutter Entertainment (CDI) (FLTR) 14,520.00p -5.31%
JD Sports Fashion (JD.) 138.00p -4.99%
Persimmon (PSN) 968.60p -4.62%
International Consolidated Airlines Group SA (CDI) (IAG) 154.90p -4.59%
Anglo American (AAL) 2,168.50p -4.41%
Kingfisher (KGF) 218.10p -4.26%
Land Securities Group (LAND) 572.60p -4.18%

FTSE 250 - Risers

Baltic Classifieds Group (BCG) 193.40p 1.79%
Discoverie Group (DSCV) 844.00p 1.08%
Domino's Pizza Group (DOM) 278.20p 1.02%
W.A.G Payment Solutions (WPS) 87.60p 0.69%
TBC Bank Group (TBCG) 2,355.00p 0.64%
Apax Global Alpha Limited (APAX) 184.60p 0.54%
C&C Group (CDI) (CCR) 132.40p 0.46%
Victrex plc (VCT) 1,428.00p 0.42%
Drax Group (DRX) 577.00p 0.38%
Lancashire Holdings Limited (LRE) 570.00p 0.26%

FTSE 250 - Fallers

Currys (CURY) 48.28p -9.67%
Wizz Air Holdings (WIZZ) 2,591.00p -6.66%
Big Yellow Group (BYG) 1,020.00p -6.34%
TUI AG Reg Shs (DI) (TUI) 563.00p -6.27%
Playtech (PTEC) 550.00p -6.14%
Mobico Group (MCG) 94.20p -5.67%
Primary Health Properties (PHP) 92.50p -5.27%
Paragon Banking Group (PAG) 509.00p -5.21%
Safestore Holdings (SAFE) 836.50p -5.10%
Workspace Group (WKP) 470.40p -4.97%