FTSE 100 close: Wall Street sell off tames London index after Powell rate warning

London’s FTSE 100 was tamed today by a sell off that gathered pace in Wall Street last night after US Federal Reserve chair Jerome Powell signalled outsized interest rate rises could be back on the menu.

The capital’s premier index squeezed out a 0.13 per cent gain to close at 7,929.93 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, fell 0.52 per cent to 19,851.97 points.

America’s top indexes the S&P 500, Dow Jones and tech-heavy Nasdaq all clocked steep falls yesterday following chair Powell’s hawkish remarks to the US congress.

London markets traded for about an hour after Powell’s comments and eventually closed just about in the red, with weaker sentiment bleeding into today’s trading session.

Powell said the eventual interest rate peak may wind up being higher than expected to tame inflation that has shown signs of late of sticking around.

Victoria Scholar, Head of Investment at interactive investor, said: “European markets [were] mostly in the red [in the morning] taking their cues from last night’s Fed-driven sell-off on Wall Street.”

A rally from insurer Hiscox sending it more than five per cent higher helped the FTSE 100 just about keep its head above water.

The pound, which slid sharply yesterday after Powell’s speech, losing as much as 1.2 per cent against the US dollar, was broadly flat today.

FTSE 100 is up so far this year

Traders piled into the greenback on the prospect of bagging gains on higher rates on US government debt. The yield on the 2-year treasury, which is sensitive to the Fed’s rate decisions, hit its highest level since 2007 yesterday. Yields and prices move inversely.

Insurer Admiral led the FTSE 100 lower today, shedding more than three five per cent after it cut its dividend.

Aerospace giant Rolls Royce traded near the top of the premier index, jumping nearly three per cent.

On the FTSE 250, energy firm Tullow Oil anchored the index, shedding around nine per cent after it published a soft financial outlook.

Oil prices were down around one per cent on the prospect of either central banks beyond the Fed also continuing to raise rates chilling global demand.