London stocks dip as global rates outlook weighs

The outside of the London Stock Exchange building is seen in the City of London, March 7, 2005. Photographer Toby Melville/File Photo

By Reuters

London stocks fell on Friday, tracking weakness in global markets after U.S. Federal Reserve officials indicated interest rates may stay high for longer, while GSK slipped after selling is remaining stake in consumer healthcare firm Haleon.

The blue-chip FTSE 100 index, opens new tab slid 0.3% and was also set to snap three weeks of gains. The midcap FTSE 250 index, opens new tab was also down 0.3%.

The pound traded slightly lower against the dollar at $1.2653.

“London market is taking a lot of its lead from global markets. A decent U.S. inflation print, various Fed officials coming out and trying to send a higher for longer message on rates,” said Richard Flax, Chief Investment Officer of Moneyfarm.

“If you were hoping for signs of resilience in the global economy, the message is a little bit more downbeat on the margin than you might have hoped.”

Fed officials’ baseline outlook remained for inflation to fall after the softer-than-expected inflation data, but they didn’t trust it fully after three months in which inflation data disappointed.

Traders are pricing in about 47 basis points of easing this year from the Fed, with a rate cut in November fully priced in, and a possibility of around 60 bps of cuts by the Bank of England in 2024 with the first in August.

Comments from BoE’s monetary policy committee member Catherine Mann later in the day will be on the radar for clues on the timing of the easing in borrowing costs by the UK central bank.

Among individual stocks, Auto Trader Group, opens new tab slipped 4.7% to the bottom of FTSE 100 after Morgan Stanley cut rating and target price on the stock.

Land Securities Group, opens new tab fell 1.7% as the commercial property firm posted a narrower annual loss, although elevated interest rates continue to weigh on the valuation of its buildings.

GSK, opens new tab slid 1.0% after the drugmaker raised 1.25 billion pounds ($1.52 billion) from selling its entire remaining stake in consumer healthcare firm Haleon, opens new tab, whose shares also slid 0.3%.