Investors take risk off approach to open busy data and rates week

Investors ditched risky assets yesterday ahead of a bumper week of global economic announcements before the Christmas break, weighing on London’s FTSE 100.

The capital’s premier index shed 0.41 per cent to close at 7,445.97 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, fell 0.51 per cent to 18,819.44 points.

Stocks took a hit on investors repositioning their portfolios to weather what could be a damaging week for equities.

FTSE 100 closed lower today

Figures from the Office for National Statistics (ONS) revealed the economy shrank 0.3 per cent over the three months to October, adding to the consensus view that the UK will tip into a long recession.

A lack of growth is likely to hit listed companies’ earnings next year as consumers rein in spending and businesses cut investment in response to higher prices and interest rates.

Data out tomorrow is likely to show inflation has passed its peak, but most analysts think it will stay high through next year.

The “market tone has been very much risk averse,” Michael Hewson, chief market analyst at CMC Markets UK, said.

FTSE 100 listed London Stock Exchange Group surged to the top of the index after news broke yesterday that global tech giant Microsoft has amassed a four per cent stake in the company.

On the mid-cap FTSE 250, sheltered housing investor Home REIT plunged nearly 18 per cent amid allegations it has misused investor money.

The pound weakened around 0.2 per cent against the US dollar despite data revealing the UK’s trade deficit widened over the three months to October.