Investing.com - U.K. stock markets weakened Thursday on global growth concerns as well as increased uncertainty surrounding the possibility of a U.S. debt default.
At 04:00 ET (08:00 GMT), the benchmark FTSE 100 index traded 0.5% lower, the mid-cap FTSE 250 dropped 0.4% and the combined FTSE 350 fell 0.5%.
Data released earlier Thursday showed that German first-quarter output shrank 0.3% from the previous three months following a 0.4% drop between October and December, meaning that Europe's main growth driver fell into recession during the winter.
Additionally, the ratings agency Fitch flagged the possibility of a downgrade to the United States’ ‘AAA’ rating late Wednesday, saying while it still expected lawmakers to reach a deal before the early-June deadline, the ongoing uncertainty had increased the risks of a U.S. default.
This has had an impact on the U.K. markets given the heavy exposure of companies, primarily in the main FTSE 100 index, to the fortunes of the U.S. in terms of overseas earnings.
Yet, despite these growth threats, Wednesday’s stubbornly high U.K. consumer prices, which left Britain with the joint highest rate of inflation among the G7 countries, along with Italy, mean that the Bank of England is likely to continue its prolonged cycle of interest rate hikes in June.
Bank of England monetary policy committee member Jonathan Haskel speaks in Washington later in the session, and his comments will be studied closely for further policy clues.
There was some good news as British consumers are set to see a big drop in energy bills, with average bills set to fall 37% from July, according to a cap set by U.K. energy regulator Ofgem.
In the corporate sector, Tate & Lyle (LON:TATE) stock rose over 2% after the food giant posted a 27% rise in revenues in the year to March, benefiting from a surge in the price of sugar over the past year.
United Utilities (LON:UU) stock rose 0.3% after the water supply firm appeased investors by lifting its final dividend by 4.6%, even as it reported a drop in profits of 42%.
Johnson Matthey (LON:JMAT) stock fell over 3% after the sustainable technologies company reported a 21% fall in annual profit, adding that it expected forex headwinds to impact its bottom line for the current year.
Qinetiq (LON:QQ) stock rose 1.6% after the defence-focused science and engineering company posted strong growth in annual profits, helped by a contract with the U.S. Army to deliver digital night vision technology, and lifted its long-term revenues target.