A sea of red washed over European stock markets after central banks dashed hopes that interest rate hikes had come to an end.
On a gloomy trading day in London, the FTSE 100 fell 1.3 per cent, or 95.12 points, to 7,360.55 and the FTSE 250 fell 1 per cent, or 184.76 points, to 17,853.09 .
The losses were reflected in Europe, where the main benchmark index in Germany lost 0.8 percent and France’s Cac 40 fell 1 percent. But Wall Street held firm as the Dow Jones Industrial Average, S&P 500 and Nasdaq rose about 1 percent in early trading.
The latest bout of turmoil came after Federal Reserve Chairman Jerome Powell sought on Thursday to pour cold water on hopes that rates have peaked.
“We know that continued progress toward our 2 percent goal is not assured,” he said.
Downtrend: Sentiment was not helped by European Central Bank President Christine Lagarde, who said she will not start cutting rates in the “coming quarters.”
“If it becomes appropriate to tighten the policy further, we will not hesitate to do so.”
Russ Mould, investment director at AJ Bell, said: ‘Powell offered a reminder that inflation is still well above 2 per cent and that the central bank would act if appropriate to keep prices in check. As rejections go, this was more of a mild nudge than a body blow, but it was enough to temper some of the recent exuberance among investors.
The mood was not helped by European Central Bank President Christine Lagarde, who said she will not start cutting rates in the “coming quarters.”
At the same time, official figures showed the UK economy stagnated over the summer.
Victoria Scholar, chief investment officer at Interactive Investor, said: “As high inflation and higher interest rates take their toll, there is a growing risk of a shallow recession in the UK next year as the impact delay of previous interest rate increases begins to take effect. way through the economy. Reducing inflation remains the Government and the Bank of England’s top priority, even if it comes at the expense of economic growth.’
Oil has climbed back above $80 a barrel after a sharp drop earlier in the week. That lifted BP 0.5 per cent, or 2.5 pence, to 477.85 pence and Shell 0.6 per cent, or 14.5 pence, to 2,629.5 pence.
On the business front, advocacy group Chemring said its results for the 12 months to the end of October should meet market expectations, including a profit of £67m. It will invest around £30m in its Norway-based business, Nobel, which secured more than £40m in orders in October amid strong demand for energy materials and devices.
But Chemring also reported extraordinary expenses on its balance sheet following a strategic review of its U.S. sensor business. The shares fell 1 per cent, or 3p, to 2,945p.
Defense company Babcock added 4.2 per cent, or 17p, to 419p as it signed a four-year contract worth £750m with the Ministry of Defense to provide the infrastructure needed to support maintenance of the United Kingdom submarines.
Investors also snapped up shares of rival BAE ahead of the defense giant’s update on Monday.
Markets were unnerved by hundreds of anti-Israel unionists who blocked the entrance to the company’s arms factory in Kent. The shares rose 1.2 per cent, or 13.5p, to 1,103.5p.
Molten Ventures, the venture capital firm that invests in technology businesses, said it expected the value of its portfolio to have fallen in the six months to the end of September due to the economic turmoil. The shares sank 7 per cent, or 18.8p, to 250.8p.
Indivior came under more pressure a day after the pharmaceutical company suffered losses and warned that revenue from Perseris, its injection used to treat adults with schizophrenia, should be at the lower end of its forecasts. The shares, which fell 15 per cent on Thursday, fell 6 per cent, or 83 pence, to 1,293 pence.