London open: Stocks fall after hawkish Fed comments

London stocks fell in early trade on Thursday after the US Federal Reserve signalled that it could hike interest rates earlier than expected.

At 0840 BST, the FTSE 100 was down 0.4% at 7,156.95.

CMC Markets analyst Michael Hewson said: "US markets closed lower yesterday after the Fed threw the market a bit of a curve ball, as the timeline for a possible rise in interest rates was brought forward, with the consensus for a possible two hikes by the end of 2023, much sooner than the previous 2024, although the underlying tone remained cautious.

"The Federal Reserve also unexpectedly nudged higher the interest rate on excess reserves (IOER) by 5 basis points to 0.15% in a sign that perhaps there was a degree of concern about rising inflation expectations. The central bank also upgraded its growth forecasts to 7% for this year, along with its core inflation forecast to 3%, a sharp adjustment up from the previous 2.2%.

"This unexpectedly hawkish tilt saw yields on US government bonds rise sharply, while US stocks rolled over, slipping to the downside, though the eventual losses were fairly well contained."

In equity markets, miners fell as metals prices retreated, with Anglo American, BHP, Antofagasta and Glencore all trading lower.

On the upside, banks fared well, with NatWest, HSBC, Barclays and Lloyds all gaining.

Premier Inn owner Whitbread rallied as it maintained guidance despite an extension of the UK government’s lockdown, forecasting strong summer demand in coastal destinations.

Travel and leisure stocks were higher following reports that fully vaccinated Britons could be exempt from quarantine after an amber list holiday. British Airways and Iberia parent IAG, budget airlines easyJet and Wizz, travel company Tui, cruise operator Carnival, Upper Crust owner SSP, engine maker Rolls-Royce, InterContinental Hotels and WH Smith were all higher.

EasyJet also got a boost after The Telegraph reported that it will announce 12 new routes to capitalise on a staycation boom with the launch of new domestic services.

Trainline was the standout gainer on the FTSE 250 after it posted a 324% jump in first-quarter sales as commuter travel started to recover as Covid lockdowns eased.

Market Movers

FTSE 100 (UKX) 7,156.95 -0.39%
FTSE 250 (MCX) 22,583.96 -0.15%
techMARK (TASX) 4,483.75 -0.18%

FTSE 100 - Risers

Whitbread (WTB) 3,424.00p 4.07%
International Consolidated Airlines Group SA (CDI) (IAG) 203.25p 3.36%
NATWEST GROUP PLC ORD 100P (NWG) 208.90p 1.80%
HSBC Holdings (HSBA) 444.65p 1.51%
Standard Chartered (STAN) 492.30p 1.44%
Barclays (BARC) 179.50p 1.34%
BT Group (BT.A) 202.50p 1.15%
Lloyds Banking Group (LLOY) 48.18p 1.01%
InterContinental Hotels Group (IHG) 5,166.00p 0.98%
Rolls-Royce Holdings (RR.) 110.94p 0.85%

FTSE 100 - Fallers

Halma (HLMA) 2,733.00p -4.14%
3i Group (III) 1,225.00p -2.62%
Polymetal International (POLY) 1,611.00p -2.48%
Antofagasta (ANTO) 1,419.50p -2.37%
Intermediate Capital Group (ICP) 2,200.00p -2.35%
Fresnillo (FRES) 815.40p -2.14%
Glencore (GLEN) 310.50p -2.07%
Evraz (EVR) 611.80p -2.05%
Spirax-Sarco Engineering (SPX) 13,330.00p -1.95%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,399.00p -1.95%

FTSE 250 - Risers

Trainline (TRN) 292.60p 7.89%
Ultra Electronics Holdings (ULE) 2,206.00p 3.67%
easyJet (EZJ) 985.00p 3.64%
TUI AG Reg Shs (DI) (TUI) 406.80p 2.83%
Wizz Air Holdings (WIZZ) 4,919.00p 2.71%
SSP Group (SSPG) 322.70p 2.28%
WH Smith (SMWH) 1,765.00p 2.02%
Morrison (Wm) Supermarkets (MRW) 180.15p 2.01%
Hilton Food Group (HFG) 1,122.00p 2.00%
Airtel Africa (AAF) 80.30p 1.97%

FTSE 250 - Fallers

Dr. Martens (DOCS) 464.00p -6.26%
Ferrexpo (FXPO) 425.40p -3.67%
Hochschild Mining (HOC) 165.30p -3.11%
BlackRock World Mining Trust (BRWM) 588.00p -2.81%
Tullow Oil (TLW) 63.16p -2.74%
Centamin (DI) (CEY) 109.90p -2.40%
Essentra (ESNT) 318.00p -2.30%
Cairn Energy (CNE) 165.80p -1.95%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,399.00p -1.95%
Templeton Emerging Markets Inv Trust (TEM) 1,008.00p -1.95%