London’s FTSE 100 was dragged lower today by investors piling out of outsourcer Bunzl despite the firm this morning raising its revenue forecast before reversing losses in the afternoon session.
The capital’s premier index jumped 0.34 per cent to 7,628.27 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, shed 0.71 per cent 19,039.41 points.
Shares in British food packaging distributor and outsourcer Bunzl tumbled over three per cent and toward the bottom of the FTSE 100 during opening exchanges today, signalling investors aren’t convinced about the companies’ aggressive acquisition strategy to drive up growth.
It retraced some of those losses to close down around 1.5 per cent.
Income has been aided by the purchase of PPE products distributor EHM.
The London-based firm said revenue growth will hit between four and five per cent in the first six months of this year, but warned operating margins will be “slightly lower” in 2023, likely sparking the sell off.
Gains on the premier index were led by online supermarket and middle class favourite Ocado surging more than five per cent. Housing stocks also recovered recent losses after investors soured on the sector on the prospect of further interest rate rises.
House builder Persimmon and property search site Rightmove finished near the top of the FTSE 100.
Bank NatWest was the biggest faller, dropping 3.47 per cent.
A muted start in the City comes after Wall Street last night underwent a mixed session, initially falling sharply after the Federal Reserve chose to keep interest rates unchained for the first time in over a year.
During Chair Jerome Powell’s press conference, America’s top three indexes, the Nasdaq, S&P 500 and Dow Jones all regained ground. Powell left the door open to further rate rises this year. The trio all advanced during opening trading today.
“UK markets erred on the side of caution at the open, choosing to take Wall Street’s more circumspect lead,” Richard Hunter, head of markets at Interactive Investor, said.
“The uncertain US outlook and a recent rally in Sterling have both worked against the main constituents of the FTSE100 given its bent towards overseas earnings, while the domestic economy remains braced for more economic pressure in the form of further interest rate hikes,” he added.
The Bank of England is expected by financial markets to raise borrowing costs at least five more times this year to a peak of around 5.75 per cent, which will likely surpass the Fed’s peak.
European Central Bank officials launched a 25 basis point increase today, sending borrowing costs among the 20 countries using the euro to 3.5 per cent. Investors thought before today’s announcement that the central bank was done with hikes, but analysts said President Christine Lagarde’s hawkish press conference signals more could be on the way.
Pound sterling roared 0.79 per cent against the US dollar.
Gilt yields – which move inversely to prices – were up slightly.
Oil prices soared more than two per cent.