Investors ditch London shares after fifth successive Bank of England rate rise

Investors ditched London-listed stocks today after the Bank of England raised interest rates for the fifth successive meeting.

The capital’s premier FTSE 100 index dropped 3.14 per cent to 7,044.98 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, fell 3.05 per cent to below 19,000.

Governor Andrew Bailey and the rest of the rate setting committee today confirmed an expected 25 basis point rate hike, leaving borrowing costs at 1.25 per cent.

Some traders were pricing in a 50 basis point rise, something the Bank has not done since it was made independent 25 years ago.

That steeper rise had been given added impetus after the US Federal Reserve earlier this week lifted American rates 75 basis points, the highest jump since 1994.

The prospect of tighter finance conditions in the UK weighed on stocks exposed to higher rates.

Housebuilder Persimmon was the biggest faller on the FTSE 100, shedding nearly 11 per cent, on bets higher mortgage rates will shake out some of the froth from the property market.

Consumer stocks also suffered heavy blows on bets the Bank’s efforts to cool inflation – running at a 40-year high of nine per cent – will add to the squeeze on household finances.

Weak updates from online fashion retailers Asos and Boohoo – down around 30 per cent and 11 per cent respectively – in which they warned shoppers are cutting spending weighed heavily on consumer stocks.

High street retailer JD Sports fell 7.59 per cent.

Just six stocks on the FTSE 100 registered gains today.