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FTSE, Pound Fall Following Hawkish Fed Minutes

Published 22/02/2018, 09:05
Updated 21/10/2020, 09:15

A jittery first half of the week got a lot bloodier on Wednesday night, as the latest Federal Reserve meeting minutes reignited the market’s fear of rising interest rates.

With ‘a majority of participants’ arguing that ‘a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate’, the notes from January’s Fed get together caused the Dow Jones to tailspin, the index shedding more than 1% by the end of the session. This in turn infected the Asian session, before blighting the European open.

While the DAX and CAC fell a nasty 0.9% and 0.6% respectively, it was the FTSE that was the worst hit. Even with cable falling 0.4%, dipping below $1.39 for the first time in over a week, the UK index dropped more than 1%, leaving it perilously close to slipping under 7200. Still to come is the UK’s 2nd estimate Q4 GDP reading, though with forecasts suggesting an unchanged 0.5% it’s hard to see it having much sway this Thursday.

As for the day’s many, many top tier earnings releases, the good and the bad just about cancelled each other out this Thursday. On the green end of things Barclays (LON:BARC) led the way, surging 5.8% after posting a 10% increase in its annual pre-tax profit to £3.5 billion; Centrica (LON:CNA), meanwhile, rose 2.3% despite a 17% plunge in group operating profit, with RSA Insurance (LON:RSA) climbing 2/3% after reaching a record level of profitability in 2017.

Admittedly it wasn’t all good news. Anglo American (LON:AAL) fell 3.2% as it missed underlying earnings expectations by 3 cents at $2.57 per share. BAE Systems (LON:BAES) shed 1.5%, with investors more focused on the claim that earnings would be flat in 2018 than the 8% increase in 2017. British American Tobacco (LON:BATS), meanwhile, suffered a 4.5% fall as investors fretted over the continued decline in cigarette sales in most countries.

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