London open: FTSE falls on hawkish Federal Reserve statement
London stocks dropped on Thursday as the Federal Reserve signalled that interest rates could rise in coming months.
The Federal Open Market Committee decided to keep rates unchanged at its policy meeting on Wednesday evening. However, the central bank noted that hiring conditions had improved and the economy had been growing at a moderate rate, which was seen as a sign that the Fed was not too worried about the UK’s vote to leave the European Union on 24 June.
The Fed added that near-term risks to the economic outlook had diminished.
“Financial markets received a breath of fresh air on Wednesday following the hawkish tilted FOMC statement which bolstered expectations of a probable US interest rate rise before year end,” said FXTM Research Analyst Lukman Otunuga.
“A striking change to the statement was the acknowledgment of US labour markets strengthening which consequently elevated the bullish sentiment towards the US economy. With domestic economic activity expanding at a moderate pace, the Fed may have been provided yet another compelling reason to break the trend of central bank caution.”
On Thursday’s agenda, Germany unemployment at 0855 BST, Eurozone economic and consumer confidence data at 1000 BST, German inflation at 1300 BST and US initial jobless claims at 1330 BST.
Closer to home, corporate earnings dominated with a raft of FTSE 350 companies reporting.
Royal Dutch Shell shares slid as it reported a sharp fall in second quarter earnings, blaming weak oil prices.
Lloyds Banking Group was also under pressure even as it reported a better-than-expected underlying pre-tax profit for the first half, as the lender ramped up its job-cutting scheme with a further 3,000 jobs on the chopping block.
On the upside, Rolls-Royce rallied as is posted first half underlying revenues that beat analysts’ estimates.
Sky was a high riser as it reported an increase in full year operating profit that topped forecasts.
Market Movers
FTSE 100 (UKX) 6,755.47 0.07%
FTSE 250 (MCX) 17,351.50 0.50%
techMARK (TASX) 3,464.67 0.21%
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 789.50p 7.86%
Anglo American (AAL) 851.00p 6.48%
Sky (SKY) 934.00p 5.24%
Fresnillo (FRES) 1,919.00p 3.90%
TUI AG Reg Shs (DI) (TUI) 973.50p 3.90%
Randgold Resources Ltd. (RRS) 8,965.00p 3.58%
Intu Properties (INTU) 304.70p 3.46%
BT Group (BT.A) 415.70p 3.38%
Relx plc (REL) 1,445.00p 2.77%
Antofagasta (ANTO) 506.50p 2.68%
FTSE 100 - Fallers
Smith & Nephew (SN.) 1,239.00p -4.69%
SSE (SSE) 1,563.00p -3.87%
Royal Dutch Shell 'B' (RDSB) 2,038.50p -3.16%
Royal Dutch Shell 'A' (RDSA) 1,980.50p -3.08%
Lloyds Banking Group (LLOY) 54.04p -3.07%
SABMiller (SAB) 4,289.50p -2.07%
Merlin Entertainments (MERL) 464.90p -1.92%
Informa (INF) 737.50p -1.80%
Schroders (SDR) 2,609.00p -1.17%
Standard Chartered (STAN) 623.00p -1.13%
FTSE 250 - Risers
Sports Direct International (SPD) 282.70p 9.79%
Just Eat (JE.) 525.50p 8.60%
Thomas Cook Group (TCG) 64.30p 7.17%
Centamin (DI) (CEY) 162.20p 5.67%
Kaz Minerals (KAZ) 149.50p 5.43%
Acacia Mining (ACA) 598.00p 4.00%
Polymetal International (POLY) 1,087.00p 3.82%
Sophos Group (SOPH) 236.00p 3.24%
Savills (SVS) 718.00p 2.72%
Aldermore Group (ALD) 140.30p 2.41%
FTSE 250 - Fallers
International Personal Finance (IPF) 295.80p -12.23%
Vectura Group (VEC) 144.70p -3.53%
Ascential (ASCL) 258.10p -3.41%
CYBG (CYBG) 248.00p -3.28%
Bodycote (BOY) 591.00p -2.72%
Weir Group (WEIR) 1,488.00p -2.36%
Ibstock (IBST) 151.50p -2.32%
Investec (INVP) 453.70p -2.03%
Tullow Oil (TLW) 200.80p -1.95%
Brewin Dolphin Holdings (BRW) 257.00p -1.76%