On Thursday, Britain’s FTSE 100 remained rather subdued as concerns about the economic outlook and mixed earnings overcame the relief associated with the less hawkish comments of the US Fed that triggered an overnight rally in US equities.
Index performance
Earlier in the session, the blue-chip index had notched an intraday high of seven-week, but it ended the session flat at 7,345.25 points.
The benchmark index was primarily down because of banks, which saw it lose 2.3%. There was a 4.6% fall in Barclays after the lender saw its profit in the first half fall more than expected.
This was because of a fine of 1.9 billion pounds that it had to bear because of regulatory missteps. Meanwhile, the midcap index, FTSE 250, which is domestically focused rose by 1.1%.
Earlier, markets had gotten some relief when interest rates were raised by the Fed as expected and it also eased some of the worries about the pace of its aggressive monetary policy.
However, the bleak forecasts from Qualcomm and Meta and data showing that the US economy declined for the second quarter in a row soured sentiment very quickly.
Market analysts said that earnings and growth data were the focus and the momentum was a bit slow due to which the stance was defensive.
Britain’s economy
The inflation rate in Britain is on its way to reaching double digits and this has put the economy under a great deal of pressure.
Moreover, this leaves the Bank of England (BoE) in a tough position because they have to decide how aggressive it should be in raising interest rates at its policy meeting scheduled for the next week.
Market analysts said that the BoE is expected to intensify its fight against inflation, which remains red hot. If there are no indications that price pressures are coming down, a rate hike of 50 basis points should be expected.
Individual performance
There was an 11.4% decline in Smith+Nephew, which was the biggest loser in the FTSE 100 index. This was after a lower annual profit margin was predicted by the medical products maker because of supply chain bottlenecks and soaring inflation.
A 0.3% rise in Shell was seen, as the oil major raked it an $11.5 billion profit in the second quarter. This was because of strong gas trading and refining profits tripling.
A 2.6% rise was also posted by Diageo, as the Johnny Walker whisky maker posted a rise in its sales for the full year by 24%.
This was thanks to bars reopening after pandemic lockdowns that drove people to drink expensive spirits last year.
A 20.0% fall was also seen in CMC Markets after a warning of higher annual costs was issued by the online trading platform because of a declining British pound and higher software expenses and professional fees.
The political turmoil in Britain is yet to settle as well, with a candidate for replacing Boris Johnson as the Prime Minister will be chosen in September.