FTSE 100 close: London index’s downbeat run extends into second half of 2023

London’s FTSE 100 kicked off the second half of the year in subdued style today, despite a rally among Britain’s largest banks and industrial giants.

The capital’s premier index was up for most of the day, before eventually closing marginally lower, down 0.06 per cent to 7,527.27 points.

The domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, climbed 0.49 per cent to 18,50.77 points

Shares in the UK’s largest listed companies have whipsawed over the first six months of 2023. Initially, the FTSE 100 raced ahead of competitor indexes in the US and Europe and breached the 8,000 point mark.

But, ongoing concerns about the UK’s ingrained inflation problem, the Bank of England’s aggressive interest rate rises to solve it and concerns about the long term trajectory of economic growth has dragged the premier index’s gains back down to around 1.2 per cent. 

A stronger pound has also pegged back the index. Those concerns seemed to loom over the City on the first trading day of the second half of this year.

Its mid-cap peer the FTSE 250, despite clocking a strong day, is in negative territory for the year so far, down more than three per cent.

Richard Hunter, head of markets at interactive investor, said: “Despite a reasonably positive performance in early trade, the index has seen any previous gains erased and is now down by 2.1 per cent so far this year as the likelihood of more interest rate rises weigh against tepid economic growth, implying a recession although the severity of such a slowdown remains under debate.”

Advances among Britain’s largest lenders hoisted the FTSE 100 into the black during opening exchanges in the City. Barclays, NatWest and Lloyds Bank all added more than one per cent to trade near the summit of the index. They largely held on to those gains.

That progress was complemented by miners and raw material producers. Anglo American leapt more than four per cent.

Rises among industrial firms came despite new numbers out early morning indicating China’s economic bounce is running out of steam. The Caixin manufacturing PMI slowed to 50.5 in June from 50.9, although the survey is still in growth territory.

Drugs giant Astrazeneca anchored the FTSE 100, shedding around eight per cent, or £10bn of its market value, after it said a new lung cancer drug may not be as effective as first hoped.

Pound sterling weakened around 0.1 per cent against the US dollar.

Oil prices nudged nearly one per cent higher.