December 4, 2022

Markets in London and across Europe fell on Thursday as interest rate hikes added to the economic gloom facing traders.

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The Bank of England was the latest central bank to launch a major interest rate hike on Thursday, as it raised rates to 2.25%, representing a nearly 14-year high.

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The increase was lower than some forecast, but markets were already shaken after the Fed late on Wednesday intervened by Japan’s central bank to support a 0.75% percent rate hike and a fall in the yen.

The FTSE 100 ended the day down 78.12 points, or 1.08%, at 7,159.62.

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volatility came from different sources

IG Senior Market Analyst Joshua Mahoney said: “Today has seen another downturn for stock markets across Europe and the US, with geopolitical and economic concerns once again providing a drag on riskier assets.

“In a week dominated by central banks, it was always becoming difficult to envisage a scenario where traders emerged with a positive outlook.

“The volatility came from a variety of sources, with warnings of Russian nuclear war following yesterday’s Federal Open Monetary Committee meeting, Bank of Japan intervention and Bank of England coming into play with rate decisions.”

Elsewhere in Europe, other major indices started the day strongly, as Wednesday’s fall in US markets weighed heavily on sentiment.

By the end of the session the German DAX was down 1.78% and the French CAC was down 1.79%.

In the US, markets opened slightly lower, but despite higher weekly jobless claims figures, sentiment had apparently softened.

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Meanwhile, sterling remained fairly stable despite a jump in interest rates, recovering somewhat from intra-day lows.

The pound was down 0.07% against the dollar at 1.126, but ended 0.10% higher at 1.146 against the euro.

In company news, JD Sports’ profits fell by nearly a fifth in value after owners warned of inflation and supply chain disruptions affecting business for the rest of the year.

The sportswear chain reported an 18% drop in pre-tax profit to £298.3 million for the six months to July 30.

The company’s shares fell 10.4p to 113.45p as a result.

Elsewhere, soap maker PZ Cussons turned a profit after the group said it was able to offset price increases through price changes and cost initiatives throughout the year.

The stock rose 4p to 199.2p on trading guidance for the current year.

Shares of Aston Martin fell 15.9p to 149.2p after renewed concerns the luxury carmaker may have to raise more capital.

Oil prices saw a slight correction on the back of a marginal depreciation in the dollar.

Brent crude oil prices rose 1.1% to US$90.82 a barrel at the close of the London market.

The biggest risers on the FTSE 100 were Coca-Cola HBC, up from 44p to 1,944.5p, Rio Tinto, up from 108p to 4828p, Kingfisher, up from 3p to 240.5p, Aveva Group, up from 35p to 3,137p, and Anglo American, up from 24p to 2,838 .

The biggest losers in the FTSE 100 were JD Sports, down 10.4p to 113.45p, Ashtead, 306p to 3907p, Intermediate Capital Group, 83p to 1,088.5p, Hargreaves Lansdowne, 59p to 832.4p and Dechra Pharmaceuticals, 182p. to 2,764p.

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