London Stocks Steady Amid Higher Oil Prices and Fed Rate Hike Expectations
Market Overview and Key Drivers
FTSE 100 and FTSE 250 Performance
Sept 7 (Reuters) - London's benchmark FTSE 100 slipped as rising oil prices and prospects of an interest rate hike by the U.S. Federal Reserve weighed on markets, while gains in energy stocks limited overall declines.
The blue-chip FTSE 100 index fell 0.1% to 10,824.74 points by 0927 GMT. The midcap FTSE 250 also slipped 0.1%.
Factors Influencing the Market
Oil Prices and Geopolitical Tensions
• Oil prices traded near six-week highs as tit-for-tat strikes between the U.S. and Iran on vessels sailing in the Strait of Hormuz and other areas kept crude oil flows low.
Interest Rate Hike Expectations
• The inflationary impact from the war has pushed up bets of interest rate hikes in global economies. Friday's strong U.S. jobs reading also lifted expectations that the Fed will increase rates this month.
• Chances of a rate hike in September stand at about 58%, compared with about 44% a month ago, according to CME's FedWatch tool.
Sector and Stock Movements
Sector Performance
• Most sectors on the FTSE 100 were lower on Monday, with the consumer-facing personal care, drug and grocery and beverages sectors down 0.8% and 1.6% respectively.
• Shares of heavyweight banks lost 0.3%.
Energy Stocks
• On the flip side, energy stocks were the biggest boosts, with BP and Shell up about 1% each.
Upcoming Economic Data and Market Outlook
Key Data Releases
• This week, an inflation reading in the U.S. and economic growth data for the UK will be parsed for more clues on how the economies are holding up.
Recent Market Trends
• The FTSE 100 was little changed last week, but the mid-cap index marked its biggest weekly fall since early June as rising bond yields hammered risk assets.
Company-Specific News
Gainers
Standard Life
• Among stocks, Standard Life gained 1.5% after the insurer posted better-than-expected profit for the first half.
Spire Healthcare
• Spire Healthcare gained about 3% after it agreed to be acquired by consortium comprising funds managed by Toscafund, Three Hills and Ares, valuing its share capital at about £1,026 million ($1.39 billion).
Decliners
Ashmore
• Emerging markets-focused asset manager Ashmore lost 1.4% after it reported a 17% jump in annual profit but narrowly missed analyst forecasts.
Other Market Factors
• Trading volumes were expected to be low as U.S. markets were closed for a holiday.
(Reporting by Purvi Agarwal in Bengaluru; Editing by Nivedita Bhattacharjee)
