Market report

London lower as Wall St pulls back on big gains

5pm: Blue chips ease

London and financial services

Stock markets were calmer today after rallying strongly last night in response to Federal Reserve chair Jerome Powell’s comments that the pace of interest rate rises may begin to slow from this month.

Wall Street stocks opened mixed this afternoon, with the Dow Jones Industrial Average slightly lower, while the S&P 500 and the Nasdaq Composite were up.

All three rose strongly yesterday, giving the FTSE 100 an initial lift at the open, but it ended today’s session 14.56 points (0.2%) lower at 7,558.49. The more domestically-focused FTSE 250 closed 1.3% higher.

In a speech in Washington, Mr Powell said: “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down.

“The time for moderating the pace of rate increases may come as soon as the December meeting. We will stay the course until the job is done.”

The markets were lifted by indications that the Fed will now ease off after imposing its most aggressive monetary tightening since the 1980s, raising its benchmark interest rate by 75 basis points at its past four meetings.

Mr Powell said that he was still hopeful the US economy would see a “soft landing” by avoiding recession and inflation falls back to target.

“It is still achievable,” he said.

His comments came after Bank of England chief economist Huw Pill said the Bank has “more to do” on raising interest rates to control rising costs, but that borrowing costs may not rise as much as financial markets have priced in. Full story here

Sterling made strong gains against the US dollar this morning, up 0.3% from $1.207 to $1.210.

House price growth slows

House prices across the UK tumbled 1.4% in November compared with October, the biggest monthly drop since June 2020, according to Nationwide Building Society. Full story here

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