London markets follow Wall Street lower as rate hike jitters ramp up

London markets followed their Wall Street counterparts lower today as investors fretted over the pace of rate hikes by central banks to tame inflation.

The capital’s premier FTSE 100 index dropped 0.44 per cent to 7,291.48 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, fell 1.1 per cent to 19,137.52 points.

Traders are responding sharply to data that indicates how quickly the likes of the US Federal Reserve and Bank of England will rein in monetary policy.

Figures published yesterday revealed US inflation expectations are still elevated, suggesting Fed chair Jerome Powell and co will sign off another 75 basis point hike.

Weaker economic data is increasingly being seen as a sign central banks will tame rate hikes to prevent tipping their respective economies into recessions – creating a paradox where bad economic news boosts stock markets.

That rationale sent Wall Street’s S&P 500, Nasdaq and Dow Jones all sharply lower yesterday, with the FTSE 100 following this morning.

Industrials led losses on the premier index, reversing some of their gains in the past few days.

Miners Anglo America and Antofagasta each dropped more than two per cent.

Travel stocks dragged down the mid-cap FTSE 250. Ferry operator Carnival shed over 11 per cent, while budget airline Wizz Air dropped 4.28 per cent.

Yields on UK government debt edged lower in a sign investors are ditching risky assets. Yields and prices move in opposite directions.

The pound strengthened 0.1 per cent to buy $1.2196.