FTSE 100 slides after ECB reins in stimulus

London’s FTSE 100 slid to its lowest level in almost a month during opening exchanges this morning, before paring back losses in the afternoon session as investors digested news the European Central Bank (ECB) will tighten policy soon.

The capital’s premier index sank 0.84 per cent to 7,036.05 points.

The ECB announced today it will start reining in the wave of stimulus measures it unleashed in response to the Covid crisis, becoming the first of the world’s big three central banks to do so.

“The Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the Pandemic Emergency Purchase Programme than in the previous two quarters,” the ECB said in a statement.

It held rates at record lows, but upped its inflation and economic forecasts for the Eurozone area.

Losses among industrials and financial stocks led the blue-chip lower today, with the likes of insurer Prudential, miners Polymetal and Rio Tinto all down more than two per cent heading into the closing session.

Edward Moya, senior market analyst for the Americas at Oanda, said: “The heavily anticipated ECB rate decision did not disappoint.  The ECB tweaked their pandemic bond buying program in what was somewhat a hawkish surprise.”

“The key takeaway from the ECB is that the economy is strong enough to start pulling back support and that they still view the decade high with inflation as transitory.”

The mid-cap FTSE 250 fared no better, falling 0.21 per cent to 23,799.94 points, driven lower by tumbling airline stocks. AIM shares dipped 0.38 per cent to 1,295.66 points.

The pound strengthened 0.57 per cent against the dollar to buy $1.3841.

Winner and losers

Airlines were the big losers on London markets this morning, with easyJet sliding 10.52 per cent to 706p after it announced it had rejected a takeover bid and was asking shareholders for more money. Fellow airline company, Wizz Air, slid 1.25 per cent to 4,913p.

British Airways parent company, IAG, listed on the FTSE 100, slipped 1.06 per cent to 151.48p. Meanwhile, aerospace manufacturer Melrose dipped 2.96 per cent to 178.85p.

Gains were tempered on the blue-chip index today, with hospitality firm Whitbread the best performer, rising by just 1.38 per cent to 3,296p.

Around the world

US markets fared better than London today, with all three of Wall Street’s main benchmarks in the green after the morning session.

Investors shook off concerns the Fed could be inspired by the ECB and tighten policy soon. The blue-chip S&P 500 was up 0.05 per cent to 4,516.67 points, while the Dow Jones gained 0.09 per cent to reach 35,062.86 points.

The tech-heavy Nasdaq was the leader on Wall Street, climbing 0.24 per cent to 15,323.41 points.

Poor performances in Asia overnight extended the global rout, with all of the region’s main benchmarks in the red.

Japan’s Nikkei closed down 0.57 per cent to 30,008.19 points, while China’s CSI 300 edged down 0.04 per cent to 4,970.01 points.

Hong Kong’s Hang Seng tumbled 2.02 per cent to close at 25,789.96 points.

The capital’s poor performances was extended into the continent – the Dax 30 slipped 0.45 per cent to 15,539.63 points and the Stoxx 600 dipped by the same amount to 465.85 points.