London midday: Stocks decline as investors digest FOMC's rate decision

UK stocks declined on Friday as the Federal Reserve decided to hold interest rates steady amid low inflation and global pressures.

The Federal Open Market Committee announced it would keep rates at 0.25% overnight. The move came as concerns over China’s economic slowdown has weighed on international markets.

“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the Fed said in a statement.

Fed Chair Janet Yellen said in light of heightened uncertainty abroad the Fed decided to wait for a rate hike. An interest rate hike in future will depend on a wide range of economic and financial indicators, she added.

However, Richmond Fed president Jeffrey Lacker voted in favour of raising the key rate by 0.25 percentage point.

"In reality the decision to hold rates shouldn’t really have been in doubt given the tepid wage growth and declining inflation, yet the fact that we only got one dissenter in the form of Jeffrey Lacker, President of the Richmond Fed suggests that there was probably a certain degree of unanimity,” said Michael Hewson, chief market analyst at CMC Markets.

Chris Williamson, chief economist at Markit, said the Fed’s decision may be seen by many as appropriate in the wake of slowing growth in China but “this is likely to be merely a temporary forestalling of the inevitable”.

He said “the lack of action leaves lingering uncertainty about the outlook for US policymaking, which will no doubt fuel further volatility in the markets”.

“Speculation will now shift to December as the next most likely month for US rates to start rising.”

Japan’s finance minister Taro Aso said the Fed’s decision reflected lobbying by emerging economies. Aso said the US central bank should raise interest rates slowly in the future to avoid the risk of sparking capital flight.

"A lot of countries would face depreciation of their own currencies if the U.S. raises rates rapidly just because of improvements in its own economy, which would cause a reversal of capital back to the US," he said.

On the company front, Ryanair descended as the Civil Aviation Authority began enforcement action against the airline over flight disruptions following a judgement from the European court of justice.

Petra Diamonds declined after saying full-year revenues dropped 10% to $425m on the back of lower diamond prices, as expected.

Pace advanced as it said its recommended combination with Arris Group continues to progress in line with expectations but reported that revenue is likely to be lower than previously guided.

Miners Randgold Resource and Fresnillo were top risers as the price of gold and silver rose.

Glencore slumped after the Investment Association and the National Association of Pension Funds criticised the commodities group for not considering all the company’s shareholders equally when it issued $2.5bn worth of new shares to cut net debt.

Market Movers

techMARK 3,050.75 -0.31%

FTSE 100 6,119.77 -1.09%

FTSE 250 16,972.43 -0.42%

FTSE 100 - Risers

Fresnillo (FRES) 616.50p +4.49%

Randgold Resources Ltd. (RRS) 3,889.00p +4.29%

British Land Company (BLND) 820.50p +1.86%

Land Securities Group (LAND) 1,246.00p +1.47%

AstraZeneca (AZN) 4,320.00p +1.16%

Sainsbury (J) (SBRY) 227.50p +1.11%

Direct Line Insurance Group (DLG) 366.10p +0.49%

United Utilities Group (UU.) 883.50p +0.45%

Hammerson (HMSO) 613.50p +0.41%

Intu Properties (INTU) 318.10p +0.16%

FTSE 100 - Fallers

Glencore (GLEN) 126.35p -4.39%

Royal Bank of Scotland Group (RBS) 317.40p -2.64%

Johnson Matthey (JMAT) 2,518.00p -2.63%

GKN (GKN) 277.50p -2.63%

Weir Group (WEIR) 1,252.00p -2.49%

Ashtead Group (AHT) 979.50p -2.34%

Standard Life (SL.) 401.30p -2.31%

Barclays (BARC) 254.45p -2.30%

Standard Chartered (STAN) 724.10p -2.29%

HSBC Holdings (HSBA) 491.10p -2.27%

FTSE 250 - Risers

UDG Healthcare Public Limited Company (UDG) 524.00p +6.29%

IP Group (IPO) 263.20p +4.94%

Allied Minds (ALM) 519.00p +4.03%

Centamin (DI) (CEY) 64.95p +4.00%

CLS Holdings (CLI) 1,858.00p +2.99%

Genus (GNS) 1,455.00p +2.46%

Riverstone Energy Limited (RSE) 952.00p +2.37%

Vectura Group (VEC) 178.70p +2.11%

Acacia Mining (ACA) 248.40p +2.05%

Euromoney Institutional Investor (ERM) 1,050.00p +1.94%

FTSE 250 - Fallers

Premier Oil (PMO) 79.30p -5.54%

Kaz Minerals (KAZ) 151.30p -4.96%

Northgate (NTG) 480.60p -3.88%

Premier Farnell (PFL) 108.00p -3.57%

Tullow Oil (TLW) 204.00p -3.32%

Rotork (ROR) 186.50p -3.17%

Elementis (ELM) 219.30p -3.09%

Victrex plc (VCT) 1,705.00p -2.79%

Man Group (EMG) 160.50p -2.67%

Debenhams (DEB) 74.50p -2.61%

FTSE TechMARK - Risers

Oxford Instruments (OXIG) 606.00p +2.36%

Oxford Biomedica (OXB) 8.80p +1.62%

KCOM Group (KCOM) 91.50p +0.83%

IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 201.53 +0.82%

Spirent Communications (SPT) 76.00p +0.66%

Consort Medical (CSRT) 929.50p +0.60%

Skyepharma (SKP) 348.25p +0.58%

SDL (SDL) 369.50p +0.41%

E2V Technologies (E2V) 235.00p +0.32%

FTSE TechMARK - Fallers

BATM Advanced Communications Ltd. (BVC) 18.50p -1.99%

Dialight (DIA) 645.00p -0.92%

Gresham Computing (GHT) 114.00p -0.87%

NCC Group (NCC) 257.25p -0.48%

Sepura (SEPU) 174.25p -0.43%