London open: Markets rattled by FOMC minutes

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UK stocks slipped on Thursday, following US and Asian markets lower overnight, as investors reacted to the possibility of further interest-rate hikes by the Federal Reserve.

FTSE All-Share

4,470.56

08:05 05/11/24

n/a

By 0824, the FTSE 100 was down 0.4% at 7,325.14, after closing Wednesday’s session at 7,356.88 – already a five-week low.

The minutes from July’s Federal Open Market Committee meeting, released on Wednesday evening, were at the top of the agenda, after recent strong economic data raised concerns that the Fed may once again step in to raise rates to stop an overheating economy and fight rising prices.

The publication showed a divided opinion within the FOMC, with a majority hinting at the need for “further tightening of monetary policy” to tackle rising inflation, which they viewed as having “significant upside risks”.

“While the consensus continues to point to no change at the September meeting, the odds are rising for a further hike in November,” said Richard Hunter, head of markets at Interactive Investor. “Such uncertainty has led some investors to reconsider whether the fact that markets had been pricing in victory against inflation came too early, and in any event whether higher rates could remain in place for longer than had been anticipated.”

Eyes will now turn to the release of US weekly jobless claims data for the week to 12 August, which is expected to show 240,000 filings for unemployment benefits, down from 248,000 the week before.

In other news, market sentiment may have been dampened by fresh concerns over China's economy, after wealth manager Zhongzhi Enterprise Group revealed it's experiencing a liquidity crisis and will have to restructure its debt, owing to its heavy exposure to the country's fragile property market.

"This latest crisis is set to see confidence in China’s economy ebb away further, with investors waiting to see what else authorities can come up with to patch up problems," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

BAE slips on M&A news

BAE Systems was trading lower on the news that it is buying Ball Corporation's aerospace business for $5.55bn in cash. Despite the negative share-price reaction, analysts at Shore Capital said the acquisition “positions BAE in a fast growing segment of the defence market so that it can capitalise on the long term uptick for defence products”.

A bunch of heavyweight stocks were trading ex-dividend, providing some downward pressure on markets, such as Abrdn, Schroders and Anglo American.

Miners on the whole though were performing relatively well, with Rio Tinto, Glencore and Antofagasta among the top performers on the FTSE 100.

On the second-tier index, Bank of Georgia was the standout riser after it reported a 33.5% jump in half-year profits, driven by a sharp rise in net interest income.

Empiric Student Property also jumped after the company raised its full-year guidance following a "very strong" start to the year, in which earnings rose 19%.

Market Movers

FTSE 100 (UKX) 7,325.14 -0.43%
FTSE 250 (MCX) 18,520.89 -0.32%
techMARK (TASX) 4,229.01 -1.01%

FTSE 100 - Risers

Rio Tinto (RIO) 4,628.00p 1.51%
Aviva (AV.) 387.50p 1.12%
Glencore (GLEN) 423.00p 0.83%
Airtel Africa (AAF) 116.10p 0.69%
RS Group (RS1) 739.80p 0.63%
B&M European Value Retail S.A. (DI) (BME) 577.20p 0.42%
Sainsbury (J) (SBRY) 267.10p 0.41%
HSBC Holdings (HSBA) 592.00p 0.37%
Frasers Group (FRAS) 819.00p 0.37%
Antofagasta (ANTO) 1,425.00p 0.35%