By Jack Barnett
London’s FTSE 100 edged lower today driven by investors fretting over how stern central bankers will be with tackling inflation.
The capital’s premier index dropped 0.22 per cent to 7,471.51 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, inched down 0.01 per cent to 19,305.23 points.
London traders are eyeing the start of the annual symposium of monetary policy starting tomorrow at the Jackson Hole resort in the US state of Wyoming.
Cooling in US inflation had ignited hopes Federal Reserve chief Jerome Powell may signal the pace of rate hikes will slow at his flagship speech on Friday.
The rate of prices dropped to 8.5 per cent last month from 9.1 per cent, a bigger fall than expected.
However, Fed officials have rolled back those expectations, prompting market participants to ramp up their bets on more rate rises.
Higher borrowing costs tend to weigh on stocks by knocking company valuations and cooling household and business spending.
The City also geared up their forecasts for further rate rises from the Bank of England, with money markets now betting borrowing costs will hit four per cent to tame inflation.
Analysts at investment bank Citigroup this week said the Bank may have to hike rates to seven per cent to deal with a more than 18 per cent inflation peak.
HSBC fell 1.9 per cent against its largest Ping An insisted its break up calls were driven by maximising shareholder returns.
FTSE 100-lister industrials dragged the index lower. Rio Tinto and Anglo American lost more than two per cent.
The slipped over 0.4 per cent against the dollar.
Neil Wilson, chief market analyst at Markets.com, said: “The FTSE 100 edged down… but has not moved more than 100pts in the last four sessions. A weaker pound and rally for oil prices has helped.”
A weaker pound often boosted London-listed stocks due many of them relying on exports to generate income.
GBP/USD exchange rate this year
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