FTSE 100 lower after Wall Street fall
The Nasdaq fell 1% and the S&P 500 dropped 0.7% last night as traders reacted to Federal Reserve chair Jerome Powell’s determination to bring down inflation even if higher interest rates trigger a recession.
Michael Hewson, chief market analyst at CMC Markets, said: “Powell’s message couldn’t have been any clearer that the Fed will keep going until the job is done.
“The pity being it took so long for investors to take notice, as stock markets dropped and bond yields spiked higher.”
With financial markets now braced for another 0.75% increase in US interest rates next month, the dollar hit a new 20 year high against a basket of major currencies.
The pound also slipped below 1.17 for the first time since March 2020 at one point yesterday as concerns about the UK economy took its toll.
The FTSE 100 index closed 0.7% lower after Powell’s speech on Friday, leaving the top flight down 1.6% over the week.
CMC expects a decline of 12 points at 7,415 as traders catch up on Wall Street developments after the bank holiday, whereas markets on the continent are poised to find positive territory.