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UK’s FTSE 100 dips on scope of tighter monetary policy; Informa jumps
Global Banking & Finance Review®
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By Ankika Biswas
(Reuters) -UK’s benchmark FTSE 100 dipped on Thursday, dragged down by miners’ stocks amid prospects of global monetary policy tightening lasting for longer, while events organiser Informa jumped on a strong earnings outlook.
The resource-heavy FTSE 100 fell 0.1% at 0805 GMT, while the domestically focused FTSE 250 midcap index was little changed.
The ECB is seen raising rates to their highest level in 22 years later in the day and leave the door open to more hikes, a day after the U.S. Federal Reserve left rates unchanged but projected rates rising by half a percentage point by 2023 end.
With the Bank of England (BoE) also poised to raise rates by 25-basis-points next week, investors have struggled to balance maintaining exposure to rising equities against possible headwinds from tighter monetary policies.
The FTSE 100 is down 0.5% so far this quarter after rising for two quarters, during which it jumped nearly 11% – its strongest rise over two quarters since early 2021.
“UK stocks will remain under pressure while we have a low growth environment at the same time, as both monetary policy and fiscal policy are being tightened and households are seeing their real disposable incomes continuing to erode,” said Stuart Cole, chief macro economist, Equiti Capital.
“In this environment, it is hard to be bullish on stocks.”
Miners fell 0.4% on lower metal prices after China’s economy stumbled in May. [MET/L]
Informa jumped 3.3% on raising its annual profit and revenue outlook, boosting the media sector by 1%, while online fashion retailer ASOS soared 13.4% on returning to profitability.
Technology company Halma slumped 5.1% to the bottom of the FTSE 100, on disappointing annual margins outlook.
Insurer Legal & General fell 2.2% after hiring Banco Santander’s Antonio Simoes as its new CEO.
(Reporting by Ankika Biswas in Bengaluru; Editing by Rashmi Aich)
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic goals such as controlling inflation, consumption, growth, and liquidity.
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, based on market capitalization. It is a key indicator of the UK stock market's performance.
Miners' stocks refer to shares of companies involved in the extraction and production of minerals and metals. These stocks can be influenced by commodity prices and global economic conditions.
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, managing monetary policy, and ensuring financial stability within the UK economy.
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