FTSE 100 live: London index pulls away from record high as US dollar strengthens on Fed rate hike bets

London’s FTSE 100 climbed down from its record high to kick off the week today, dragged lower by big British retailers taking a tumble.

The capital’s premier index dropped 0.87 per cent to 7,833.20 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, edged 0.10 per cent lower to 20,593.46 points.

The fall takes the FTSE 100 away from its highest level it has ever reached, hit last Friday, of just over 7,900 points.

The last time the index was trading at that level was the summer of 2018.

Soaring energy prices have whacked household finances this year and propelled inflation to multi-decade highs, likely tipping the UK economy into recession later this year.

However, a big chunk of the FTSE 100 is made up of large energy producers, like Shell and BP, who have raked in bumper profits, prompting investors to pile into London-listed shares and pushing the index to its record high.

Analysts said market sentiment was knocked by growing concerns about how tough the US Federal Reserve responds to last week’s red hot jobs report. The American economy added more than 500,000 jobs last month, beating market expectations by around 300,000.

FTSE 100 is up more than five per cent this year

“There is worry resurfacing about what Friday’s super-strong US jobs figure signifies about just how tight the Federal Reserve will turn its monetary screws to continue to squeeze inflation and whether that could still hurtle the economy towards a harder landing, despite its robust showing so far,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.

Bets ramping up on the Fed continuing to rush out rate hikes to slow the US economy strengthened the US dollar around 0.2 per cent against the world’s top currencies.

FTSE 100 retailers slid during opening trading this week with high street fashion retailer JD Sports dropping 1.93 per cent, while Next lost nearly two per cent.

Mike Ashley’s Frasers Group was down around the same amount.

Investors are also gearing up for a big week of earnings, with oil giant BP updating investors in London and several top European banks including Credit Suisse releasing results.