The FTSE 100 ended up down by 1.17% at 7,385.86 and the FTSE 250 down by 1.78% at 19,167.21 amid a global sell-off sparked by poorer-than-expected inflation data from the U.S. which led investors to anticipate further rate hikes from the Federal Reserve.
Steven Blitz, chief US economist at TS Lombard, said the Federal Reserve is “not going to produce the soft-landing fairy tale. The Fed has better odds of rolling a hard eight than engineering a soft landing.”
Analysts now expect the Federal Reserve to raise interest rates by 75 basis points, and expect a further hike from the Bank of England’s Monetary Policy Comittee.
The Bank of England’s Monetary Policy Committee was due to have its next interest rate meeting on September 15, but this has been pushed back by a week due to the death of Queen Elizabeth.
In more optimistic news, the UK’s unemployment rate is at its lowest since 1974, after a drop to 3.6% in the three months to July.
Shares in tonic brand Fevertree (GB:FEVR) were up 5.3% despite a drop in profits driven by rising costs, with sales rising 14% to £160.9m. Tim Warrillow, the group’s chief executive, said: “We’re not seeing any of our customers trading down to Schweppes. We’ve got 51 per cent of the UK on-trade and Schweppes has only half that. We also have 45 per cent of the on and off-trade combined and are now in more households than any other mixers brand.”
Supermarket delivery pioneer Ocado (GB:OCDO) was among the day’s biggest fallers, dropping 14% on a warming of lower sales and profits.
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