FTSE 100 subdued as Fed relief fades, earns mixed bag

The offices of the London Stock Exchange Group are seen in the City of London, Britain December 29, 2017. REUTERS/Toby Melville

July 28 (Reuters) – The UK’s FTSE 100 was subdued on Thursday as mixed results and worries about the economic outlook outweighed relief following less hawkish comments from the U.S. Federal Reserve that sparked a overnight rally on Wall Street.

The blue-chip index (.FTSE) closed at 7,345.25 points after hitting a seven-week intraday high earlier in the session, while the national mid-cap index (.FTMC) gained 1, 1%.

Banks (.FTNMX301010) weighed on the UK benchmark, down 2.3%, with Barclays (BARC.L) losing 4.6% after the lender’s first-half profit fell more than expected in due to a 1.9 billion pound ($2.3 billion) hit for regulatory missteps. Read more

Markets had taken some comfort earlier after the Fed raised interest rates on Wednesday as expected and eased some concerns about the pace of future rate hikes, but gloomy forecasts from Meta and Qualcomm and an early reading showing as the US economy contracted again quickly soured.

“We really have to look at the growth data and the earnings and I think the momentum is a bit slower there…that’s why we’re not continuing this rally and maintaining a defensive stance,” said Willem Sels, HSBC’s Global Chief Investment Officer for Private Banking and Wealth.

Britain’s economy is strained by double-digit inflation, leaving the Bank of England in a dilemma over how aggressively it should raise interest rates at its policy meeting August next week.

“We expect the Monetary Policy Committee (MPC) to step up its fight against high inflation at its meeting,” Paul Dales, chief UK economist at Capital Economics, wrote in a note.

“The MPC may imply that it is ready to raise rates by 50 basis points at future meetings if there are no signs that domestic price pressures are easing.”

Smith + Nephew (SN.L) fell 11.4%, the FTSE 100’s biggest loser, after the medical device maker warned of a lower annual profit margin due to soaring inflation and supply chain challenges. Read more

Shell (SHEL.L) edged up 0.3% as the oil major reported record quarterly profit of $11.5 billion, driven by a tripling of refining profits and strong gas trading. Read more

Whiskey maker Johnnie Walker Diageo (DGE.L) climbed 2.6% after posting a 24% rise in full-year sales as more people drank expensive spirits and bars reopened after pandemic shutdowns last year. Read more

CMC Markets (CMCX.L) fell 20.0% after the online trading platform warned of higher annual costs due to a weaker pound and higher professional fees and charges. software expenses.

Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru; Editing by Shounak Dasgupta and David Holmes

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