London’s FTSE 100 drops as miners dig themselves into a hole

London’s FTSE 100 closed the day lower today after it was pulled by investors ditching UK mining giants.

The capital’s premier index fell 0.58 per cent to 7,144.14 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, jumped 0.12 per cent to 18,217.75 points.

Mining firms were hit by investors souring on the sector due to fears over the global economy tripping into a slump.

Antofagasta, Anglo American and Rio Tinto all shed more than 2.60 per cent today.

Historically high inflation and central banks raising interest rates steeply to tame it have sent a chill through some of the world’s largest economies.

Slumping demand caused by businesses and households being squeezed by higher prices has hit commodity consumption, knocking market sentiment to mining firms.

China, among the world’s biggest commodity consumers, is wilting under the weight of ongoing Covid-19 restrictions, sucking revenue away from industrial companies. 

A court today heard miner Glencore had flown cash bribes to Africa to pay officials. The news hit the company’s stock, which finished down nearly two per cent.

UK traders also spent today mulling how to reposition their portfolios ahead of the US Federal Reserve’s interest rate decision, announced after the London stock exchange shut.

Financial firms led the FTSE 250 higher, with insurer Hiscox topping the index, closing up 5.92 per cent.

The pound weakened 0.24 per cent against the US dollar to buy $1.1457.

The yield on the 10-year gilt, the UK’s borrowing costs benchmark, dropped. Yields and prices move inversely.