Thursday 25 August 2022 5:40 pm | Updated: Thursday 25 August 2022 5:42 pm

London’s FTSE 100 struggles for direction ahead of Jackson Hole

Fiscal dominance is when the decisions of an independent central bank are driven by how it might impact governments rather than inflation.

London’s FTSE 100 struggled for direction today driven by investors seemingly holding positions until central bankers signal at Jackson Hole how firm they will be with taming inflation.

The capital’s premier index added 0.11 per cent to reach 7,479.74 per cent, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, fell 0.25 per cent to 19,257.87 per cent.

The annual summit of the world’s top central bankers in the US state of Wyoming kicks off today.

It is the first Jackson Hole symposium in decades in which monetary authorities are responding to soaring inflation.

Investors are second-guessing how hawkish or dovish US Federal Reserve chief Jerome Powell will be in his centrepiece speech tomorrow.

Wall Street’s rate hike expectations had been rolled back by a series of new data indicating inflation across the pond is cooling. The US’s consumer price index dropped to 8.5 per cent last month, a steeper fall than analysts’ were expecting.

However, Fed officials have reaffirmed their commitment to squeezing inflation with more rate rises, reigniting London, US and European investors’ expectations for the world’s most influential central to keep tightening policy rapidly.

“There’s a lot riding on US Federal Reserve chair Jerome Powell’s address tomorrow. Speculation is running so hot ahead of his remarks that it feels like even subtle variations in intonation could make a difference to jittery markets,” Russ Mould, investment director at AJ Bell, said.

That uncertainty loomed over London’s FTSE 100 during opening exchages.

FTSE 100-listed retailers JD Sports and Ocado lost over 2.3 per cent, mainly driven by investors betting consumers will pull back spending in response to inflation.

Building materials firm CRH jumped over three per cent after an impressive set of earnings, sending it to the top of the FTSE 100.

The pound, which earlier this week tumbled to its lowest level against the dollar since March 2020, strengthened 0.14 per cent against the greenback to buy $1.1815.

Oil prices inched lower.