The London stock market pulled back after the chairman of the US Federal Reserve, Jerome Powell, revealed it would be cranking up the pace of interest rate hikes from 25 basis points per meeting to 50bp.

His comments were more hawkish than expected as he defended the Fed’s decision to hike interest rates to a 16-year high in order to combat inflation — and said more aggressive monetary policy is on the table.

“We will stay the course until the job is done,” he said.

Stocks slid soon after Powell took the stand. At the close, the Dow Jones Industrial Average was down 1.72%, while the S&P 500 slipped 1.53% and the Nasdaq Composite saw out the session 1.25% firmer.

The FTSE 100, which had been trading higher, fell after Mr Powell’s remarks to close 10.31 points lower at 7,919.48.

Miners took a hit, with Glencore down 23.25p (4.63%).

Danni Hewson, AJ Bell head of financial analysis, said: “Investors hoping the Fed Chair would lay out a path to pivot were disappointed.

“Jay Powell pulled no punches when it came to the Fed’s first priority to get inflation under control, and to go as far and as fast with rates as those numbers required.

“He didn’t say anything surprising or anything we didn’t know already, but there was a steely quality to his testimony today and no sign of the dove some investors had been hoping to see fly. It’s made markets nervous, with that new year optimism now thin on the ground and today’s comments pretty much obliterating it for now.

“Miners have continued to act as a drag on the FTSE 100 today after China import/export figures disappointed. Investors are pricing in a less dynamic recovery than had been anticipated after the country ditched its zero-Covid measures.”

Greggs

Fast food chain Greggs said sales jumped by 23% last year and it is planning big expansion plans, although the number of customers has remained below pre-pandemic levels, it said.

Greggs opened a record 186 shops over the year, and closed 39.

Growth plans are planned despite profit rising by just 1.9% over the year to £148.3m, after it was hit by steep cost inflation and the withdrawal of the Government’s pandemic support.

Chief executive Roisin Currie, who took up the top job last May, said she was confident in the prospects for 2023 despite the ongoing high level of inflation.

“Although consumer incomes remain under pressure, Greggs continues to offer exceptional value to people looking for great tasting, high-quality food and drink on-the-go,” she added.

Wood rejects new offer

Wood Group has rejected a fourth proposed cash offer for the energy services company but will engage on a “limited basis” with its suitor Apollo Global Management.

Full story here

STV profits rise

STV boss Simon Pitts said the company is benefiting from a reduction in reliance on traditional television and creating a “future-facing” media business.

Full story here

Reach profits fall

Reach, publisher of newspapers including the Daily Record, Sunday Mail and Daily Express, saw profits fall by about a quarter as the advertising market weakened.

Full story here

Valentine’s Day lift for shops

Valentine’s Day gave consumers some relief from the cost of living gloom with purchases of fragrance and jewellery helping push UK retail sales up 5.2% in February against an increase of 6.7% for the same month last year.

British Retail Consortium chief executive Helen Dickinson said: “While the cost-of-living crisis has made customers increasingly price-sensitive, they are still ready to celebrate special occasions.

“This helped deliver strong sales of fragrance and jewellery for Valentine’s Day. Energy-saving appliances also continued to sell well, but the rush for warm coats and boots subsided as the January sales splurge satisfied customer appetite.”

Paul Martin, UK head of retail at KPMG, said: “With overall inflation running at around 10%, and food inflation sitting nearer 20%, total sales growth for February of just 5% will be eating hard into retail margins and masking the true state of the sector’s health.”

Global markets

On equity markets, traders held their breath for a number of economic data points and comments from policymakers scheduled for later in the week.

Congressional testimony is due from Federal Reserve chairman Jerome Powell which is expected to provide insight into the central bank’s thinking about inflation and its plans for interest rates.

Investors also await February’s jobs report, scheduled for Friday, which will follow numbers showing that the US economy added 517,000 jobs in January.

At the close, the Dow Jones Industrial Average was up 0.12%, while the S&P 500 advanced 0.07% and the Nasdaq Composite saw out the session 0.11% stronger.