London open: Stocks fall amid rate hike worries; Lloyds fails to impress

London stocks fell in early trade on Wednesday, with investors eyeing the latest minutes from the FOMC as rate hike concerns dented sentiment.

At 0835 GMT, the FTSE 100 was down 0.6% at 7,926.60, taking its cue from weak US and Asian sessions.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Investors are waking up to a stark realisation that the Fed’s work is not done, and that interest rates may have to be hiked even higher to cool hot inflation.

"Waves of exuberance, which have propelled equities higher since the start of the year, have turned into tides of disappointment and apprehension about the difficulties that still may lie ahead for the mighty US economy. High hopes that the Federal Reserve could cut rates by the end of the year have been dashed, replaced by worries that up to three hikes in quick succession may be needed to tame the price spiral.

"The decision by the Reserve Bank of New Zealand to hike rates to a 14-year high of 4.75%, with warnings of more to come, highlights the extent to which inflation is still a thorn in the side of many economies across the world."

The latest FOMC minutes will be released at 1900 GMT.

In equity markets, Lloyds Bank lost ground after reported flat annual profits with higher net income and lower costs were 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.

Rio Tinto was also in the red as the miner 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 Anglo American, Glencore and Antofagasta among the worst performers on the FTSE 100.

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

On the upside, WPP nudged higher after an upgrade to ‘outperform’ from ‘neutral’ at Credit Suisse.

Market Movers

FTSE 100 (UKX) 7,926.60 -0.64%
FTSE 250 (MCX) 19,750.36 -0.51%
techMARK (TASX) 4,632.08 -0.27%

FTSE 100 - Risers

Rentokil Initial (RTO) 512.60p 0.79%
BT Group (BT.A) 139.95p 0.47%
Informa (INF) 676.80p 0.45%
Reckitt Benckiser Group (RKT) 5,744.00p 0.42%
WPP (WPP) 1,015.00p 0.40%
Relx plc (REL) 2,500.00p 0.36%
Experian (EXPN) 2,934.00p 0.27%
Hargreaves Lansdown (HL.) 859.60p 0.26%
BAE Systems (BA.) 908.80p 0.22%
London Stock Exchange Group (LSEG) 7,586.00p 0.18%

FTSE 100 - Fallers

Anglo American (AAL) 3,080.00p -2.35%
Rio Tinto (RIO) 6,070.00p -2.16%
Endeavour Mining (EDV) 1,742.00p -1.91%
Lloyds Banking Group (LLOY) 50.01p -1.88%
Glencore (GLEN) 493.95p -1.86%
Ocado Group (OCDO) 617.20p -1.59%
Prudential (PRU) 1,236.50p -1.59%
BP (BP.) 541.60p -1.58%
CRH (CDI) (CRH) 3,839.50p -1.49%
Antofagasta (ANTO) 1,697.50p -1.42%

FTSE 250 - Risers

Future (FUTR) 1,458.00p 1.46%
Hilton Food Group (HFG) 700.00p 1.01%
Moneysupermarket.com Group (MONY) 227.20p 0.89%
Capricorn Energy (CNE) 250.00p 0.64%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 312.50p 0.48%
Travis Perkins (TPK) 1,002.00p 0.44%
Just Group (JUST) 84.90p 0.41%
Big Yellow Group (BYG) 1,250.00p 0.40%
Digital 9 Infrastructure NPV (DGI9) 79.30p 0.38%
Darktrace (DARK) 271.40p 0.37%

FTSE 250 - Fallers

Hunting (HTG) 318.00p -3.05%
Drax Group (DRX) 650.00p -2.99%
Wood Group (John) (WG.) 147.00p -2.65%
Moonpig Group (MOON) 106.80p -2.38%
Marshalls (MSLH) 324.00p -2.29%
Synthomer (SYNT) 150.80p -2.20%
PureTech Health (PRTC) 220.00p -2.00%
Hammerson (HMSO) 28.50p -1.99%
Playtech (PTEC) 576.50p -1.96%
888 Holdings (DI) (888) 70.80p -1.94%