Markets plunge into the red as interest rate hikes heighten economic concerns


Markets in London and across Europe fell Thursday as a series of rate hikes further exacerbated the economic gloom facing traders.

The Bank of England was the last central bank to launch a major rate hike on Thursday, when it raised interest rates to 2.25%, representing a nearly 14-year high.

The rise was lower than some had forecast, but came after markets were already shaken on Wednesday by a 0.75% percentage point rate hike by the Fed and intervention by the Bank of Japan to support the plunge in the yen.

The FTSE 100 ended the day at 78.12 points, or 1.08%, at 7,159.62.

Volatility comes from a variety of sources

Joshua Mahoney, senior market analyst at IG, said: “Today, equity markets across Europe and the US have experienced another tailspin, with geopolitical and economic concerns putting another brake on risky assets.

“In a week dominated by central banks, it would always be difficult to envision a scenario where traders emerge with positive outlooks.

“The volatility comes from several sources, with the aftermath of yesterday’s Federal Open Monetary Committee meeting coming into play alongside a Russian nuclear war warning, Bank of Japan intervention and a Bank of England interest rate decision. .”

Elsewhere in Europe, the other major indices started the day solidly lower as sentiment was significantly affected by Wednesday’s downturn in US markets.

The German Dax fell 1.78% at the end of the session and the French Cac finished 1.79% lower.

In the US, markets opened slightly lower, but sentiment had clearly weakened, despite higher weekly unemployment figures.

Meanwhile, sterling held fairly stable despite rising interest rates, recovering somewhat from the lows during the day.

The pound fell 0.07% against the dollar at 1.126 but was 0.10% higher against the euro at 1.146 at the end.

In company news, JD Sports fell in value after profits fell nearly a fifth as bosses warned of inflation and supply chain disruption that would affect trading for the remainder of the year.

The sportswear chain recorded an 18% decline in pre-tax profits to £298.3 million for the six months to 30 July.

As a result, the company’s shares fell 10.4p to 113.45p.

Elsewhere, soap maker PZ Cussons posted gains after the group said it could offset price increases through year-round price changes and cost initiatives.

Shares rose 4p to 199.2p as it held on to current year trading guidelines.

Shares of Aston Martin fell 15.9 pence to 149.2 pence on renewed concerns that the luxury car maker may need to raise more capital.

The oil price showed a modest improvement as it benefited from a slight weakening of the dollar.

The price of Brent crude rose 1.1% to $90.82 a barrel as the London markets closed.

The biggest risers on the FTSE 100 were CocaCola HBC, up 44p to 1,944.5p, Rio Tinto, up 108p to 4828p, Kingfisher, up 3p to 240.5p, Aveva Group, up 35p to 3,137 p, and Anglo American, up from 24p to 2,838 p.

The biggest decliners on the FTSE 100 were JD Sports, down from 10.4p to 113.45p, Ashtead, down from 306p to 3907p, Intermediate Capital Group, down from 83p to 1,088.5p, Hargreaves Lansdown, down from 59p to 832.4p, and Dechra Pharmaceuticals, down from 182p to 2,764p.

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