FTSE 100 close: London markets flat as investors digest higher for longer message
London’s FTSE indexes ended flat on Tuesday as markets digested the implications of interest rates having to remain higher for longer.
The FTSE 100 ended 0.02 per cent higher at 7,625.72 while the FTSE 250 fell 0.43 per cent to finish at 18,336.65.
After a busy week of central bank activity last week, markets are mulling signals from central bankers which suggest that interest rates will remain at an elevated level for longer than markets would like.
Although both the Bank of England and Federal Reserve left interest rates on hold last week, the forward guidance suggested that interest rates will have to remain at their peak to bring down stubborn inflation.
“With little data expected to blow away worries about the impact on high interest rates, concerns are set to linger, holding back gains for stocks,” Susannah Streeter, head of money and markets at Hargreaves Lansdown said.
“Nervousness is setting in about restrictive monetary policy in major economies, particularly the US, reducing appetite for goods and services, as consumers and companies keep their belts tightened,” she continued.
There were renewed worries over US government debt after Moody’s warned that a shutdown would likely have “an increasingly negative impact on the credit profile”.
“That could lead to a negative outlook, potentially a downgrade at some point, if those pressures aren’t addressed,” Moody’s analyst William Foster told Reuters.
On the FTSE 100, RS Group rose 5.8 per cent amid takeover speculation. Barclays climbed 3.9 per cent, while Ocado and Entain posted solid gains as well.
Smith Group propped up the index, falling around 4.0 per cent.
On the FTSE 250, Close Brothers fell just under two per cent after its profits were hit by increasing costs and provisions for bad loans.