FTSE 100 slips amid fading hopes of summer interest rate cut

24 May 2024, 17:24

London Stock Exchange trading
London Stock Exchange trading. Picture: PA

The blue-chip index fell, marking a week-long retreat on negative sentiment around the base rate.

The FTSE 100 fell again on Friday as hopes faded of a summer interest rate cut from the Bank of England.

The blue-chip index slipped 0.26%, with utilities and power firms again among the biggest fallers.

The FTSE 100 lost 22 points for the day, finishing at 8,317. It finished down 1.2% for the week.

Kathleen Brooks, research director at XTB, said: “The recalibration of interest rate expectations is having a big impact on financial markets.

“It is no surprise that the Dow Jones and the FTSE 100 have been the worst performers in the past week.

“The financial sector and the consumer discretionary sector are two of the largest weightings in the Dow Jones. Both of those could be impacted by the Fed keeping rates higher for longer.

“Added to this, the FTSE 100 has some cyclical qualities that leave it vulnerable to a change in risk sentiment.”

It comes after inflation data earlier this week indicated that services sector inflation is remaining stubbornly high, slimming the chances that the Bank will cut the base rate at its June decision.

Sterling gained against the dollar, up 0.39% at 1.274 US dollars as markets closed in London. It was 0.04% up against the euro, at 1.1745 euros.

Elsewhere in Europe, Germany’s Dax nudged upwards, finishing 0.02% up, while France’s CAC 40 ended down 0.09%.

Stateside, the S&P 500 had a strong start at 0.7% up as markets closed in London while the Dow Jones was up 0.3%. The Dow Jones was 2% down for the week after a similar change of tone on interest rates in the US.

In company news, Abrdn’s chief executive said he is stepping down after nearly four years in the role, having led the group through its controversial rebrand.

Stephen Bird will step aside after agreeing with the board that it is the right time for a refreshed leadership, according to a statement.

Abrdn said it will start the search process for Mr Bird’s successor following a “significant strategic repositioning” of the firm.

Shares gained 1.6% on Friday.

Meanwhile, GSK has won a potentially expensive personal injury case in the US over its heartburn medicine Zantac.

Angela Valadez, an 89-year-old woman living in the state of Illinois, claimed that prolonged use of Zantac caused her to develop colon cancer.

But a jury on Thursday determined that the medication was not responsible, and the judge rejected her request for 640 million dollars (£503 million) in damages.

GSK shares lost midday gains to finish 0.2% down.

Utilities companies took another beating on Friday, in the second day of losses for the sector.

National Grid lost 11% on Friday, its second day of heavy losses after announcing a rights issue to pay for its next five years of pylon investment on Thursday morning.

Meanwhile, water companies Severn Trent and United Utilities also lost ground amid continued investor concerns over a sewage pollution scandal that is blighting the industry.

The price of a barrel of Brent crude oil was up 1% to 82.2 US dollars as markets were closing in London.

The biggest risers on the FTSE 100 were Ocado, up 21.7p to 373.8p, Marks & Spencer, up 6.6p to 299.2p, Intertek, up 71p to 5025p, Airtel Africa, up 1.7p to 121p, and Phoenix Group, up 7p to 503p.

The biggest fallers on the FTSE 100 were National Grid, down 115.6p to 889.4p, RS Group, down 19.5p to 740.5p, Fresnillo, down 13.5p to 596p, Severn Trent, down 54p to 2449p, and Centrica, down 2.75p to 141.15p.

By Press Association