London markets have contracted a day after the Bank of England pushed ahead with interest rate hikes at successive meetings for the first time since 2004.
The premier FTSE 100 index has fallen by 0.1 per cent today while the FTSE 250, London’s midcap index, is down by 0.55 per cent.
Today the governor of the Bank of England issued a bleak warning that inflation, already at its highest level for 30 years, could hit seven per cent by April raising concerns of a tightening income squeeze for UK households. It comes a day after the UK’s central bank raised interest rates to 0.5 per cent.
“Inflation concerns are looming ever larger with the cost of living squeeze intensifying as monetary policy tightening ramps up, and no let-up in soaring energy prices in sight,” said Susannah Streeter, senior investment and markets analyst for Hargreaves Lansdown.
“With a more aggressive attitude coming from the Bank of England towards reining in inflation, it has set the tone for more anxiousness about the effect of sharply rising prices will have on consumer confidence and corporate resilience,” she continued.
The FTSE 100 index touched lows of 7,520.63 points as financial and industrial stocks led losses. Retail investment platform Hargreaves Lansdown fell by 3.32 per cent following hawkish comments from the Central Bank. Natwest and Barclays tumbled by two per cent.
On the flip side, the FTSE 100 index was boosted by Energy stocks, which rose 3.2 per cent as oil prices climbed on US supply concerns. Shell is leading gains at 3.19 per cent while BP climbed 2.41 per cent.
It was a similar story for the FTSE 250 index with TBC Bank leading losses as it fell 3.23 per cent. Meanwhile, consulting company John Wood Group led gains with a rally of 3.85 per cent.
In a sign that the mood is sour across global markets Europe’s STOXX 600 index sunk by 1.18 per cent today while the US’ Nasdaq closed down by 3.74 yesterday as tech stocks led losses.