London midday: FTSE extends losses ahead of FOMC minutes

The FTSE 100 was down 1.1% at 7,926.60, having taken its opening cue from sharp falls in the US and Asia.

Stocks on Wall Street tanked on Tuesday, suffering their worst day in two months after more positive economic data signalled the potential for further rate hikes by the Federal Reserve.

S&P Global's US composite purchasing managers’ index for February printed at 50.2, up from 46.8 a month earlier and coming in ahead of expectations of 47.5.

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 fell after it reported 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.

Rio Tinto also lost ground as 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, Glencore, Rio and Anglo American among the worst performers on the FTSE 100.

Russ Mould, investment director at AJ Bell, said: "The risk-off mentality explains why miners were among the biggest fallers. 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 tumbled after the release of its full-year results.

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

Market Movers

FTSE 100 (UKX) 7,888.86 -1.11%
FTSE 250 (MCX) 19,619.68 -1.16%
techMARK (TASX) 4,612.24 -0.69%

FTSE 100 - Risers

Relx plc (REL) 2,511.00p 0.80%
Rentokil Initial (RTO) 512.00p 0.67%
Reckitt Benckiser Group (RKT) 5,744.00p 0.42%
Coca-Cola HBC AG (CDI) (CCH) 2,116.00p 0.38%
Associated British Foods (ABF) 1,971.00p 0.10%
Compass Group (CPG) 1,925.50p 0.05%
British American Tobacco (BATS) 3,153.00p -0.06%
BT Group (BT.A) 139.20p -0.07%
Unilever (ULVR) 4,230.50p -0.19%
Diageo (DGE) 3,571.50p -0.20%

FTSE 100 - Fallers

Burberry Group (BRBY) 2,509.00p -3.20%
Antofagasta (ANTO) 1,667.00p -3.19%
Abrdn (ABDN) 203.30p -2.87%
Airtel Africa (AAF) 121.30p -2.80%
Glencore (GLEN) 489.35p -2.77%
Rio Tinto (RIO) 6,033.00p -2.76%
Anglo American (AAL) 3,071.00p -2.63%
Ocado Group (OCDO) 611.60p -2.49%
Prudential (PRU) 1,228.00p -2.27%
Rolls-Royce Holdings (RR.) 107.60p -2.16%

FTSE 250 - Risers

Digital 9 Infrastructure NPV (DGI9) 81.40p 3.04%
Just Group (JUST) 86.10p 1.83%
Capital & Counties Properties (CAPC) 125.00p 1.63%
Cranswick (CWK) 3,030.00p 1.41%
Spire Healthcare Group (SPI) 247.50p 1.02%
Bakkavor Group (BAKK) 108.80p 0.93%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 152.40p 0.93%
Hipgnosis Songs Fund Limited NPV (SONG) 88.00p 0.92%
IP Group (IPO) 63.10p 0.56%
Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 312.50p 0.48%

FTSE 250 - Fallers

TBC Bank Group (TBCG) 2,335.00p -7.34%
Watches of Switzerland Group (WOSG) 837.00p -4.34%
Domino's Pizza Group (DOM) 298.40p -4.17%
Currys (CURY) 76.10p -3.61%
Hunting (HTG) 316.50p -3.51%
Energean (ENOG) 1,133.00p -3.33%
Morgan Sindall Group (MGNS) 1,596.00p -3.27%
Petershill Partners (PHLL) 161.40p -3.24%
Softcat (SCT) 1,194.00p -3.08%
OSB Group (OSB) 535.50p -3.08%