By Chris Dorrell
London’s FTSE indexes closed in the red on Thursday as continued concern over possible escalation in the Middle East left investors feeling cautious.
The FTSE 100 fell 1.17 per cent to 7,499.53 while the midcap FTSE 250 index dropped 1.09 per cent to 17,213.14.
“A wary mood is spreading as the Middle East crisis looks increasingly intractable,” Susannah Streeter, head of money and markets, Hargreaves Lansdown said.
“President Biden has left Israel, having extracted a promise of aid for Gaza, but there are little signs of an easing in high tensions.
“Other diplomatic efforts will be closely watched, with the UK’s Prime Minister visiting Israel, and the foreign secretary meeting leaders in neighbouring countries, but a resolution still looks very difficult to achieve and concerns remain about the conflict potentially widening,” she continued.
A risk-off sentiment has boosted gold prices and strengthened the dollar. Yields on government debt have also climbed reflecting uncertainty over the economic environment.
Gilt yields climbed in the UK yesterday after inflation remained stuck at 6.7 per cent in September. Yields on 10-year and 30-year US Treasuries climbed to their highest level since 2007 as new data showed that consumer spending power remained resilient, making higher interest rates more likely.
“Bond investors aren’t just reacting to expectations of interest rates staying higher for longer but are nervous about the size of debt piles which have ballooned to pay for spending commitments, and which are increasingly costly to maintain,” Streeter said.
On the FTSE 100, Rentokil slumped to the bottom of the bluechip index after warning that “near-term market uncertainty” will impact its performance in North America. Its shares closed over 17 per cent lower.
Shares in the London Stock Exchange Group, which owns the capital’s bourse, climbed 1.6 per cent.
The firm said it was on track to hit the top end of its forecasts for the year, after income ticked up over the summer despite a slump at its flagship exchange.
Shares in Hargreaves Lansdown meanwhile fell 6.1 per cent.
Although revenue climbed 13 per cent in the first quarter, the DIY investment firm confirmed a slowdown in the level of new business. Hargreaves Lansdown saw £600m of net new business, down from £700m last year.
Fellow retail investment platform AJ Bell rose 4.9 per cent however, as it reported that assets under administration were around 10 per cent higher than last year.
