The FTSE 100 showed signs of a hangover from yesterday’s surprise 0.5% rate hike on Friday, led lower by housebuilders and Ocado.
The Bank of England’s decision to hike rates by 0.5% will have implications for the FTSE 100’s UK-focused contingent, who were trading down heavily again on Friday.
“Yesterday’s super-hike to UK interest rates, and the fact there’s likely more to come, continue to play on investors’ minds as they weigh up the impact on corporate earnings,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
HSBC equity analysts took an axe to their housebuilder ratings on Friday, cutting Taylor Wimpey, Barrat Developments and Persimmon to a hold. Berekely Group was cut to reduce.
Housebuilders were among the worst performers, with Persimmon shares crumbling over 3%.
GSK was the FTSE 100 top riser after announcing the settlement of a Zantac court case in the US. GSK shares were over 5% higher.
US Tech shares
Even a strong showing from US tech names overnight failed to ignite enthusiasm in UK shares on Friday. Yesterday, Fed chair Jerome Powell provided reassuring tones to the market, saying future US rate hikes would be more considered and hinted there may not be too many more this year.
“Federal Reserve chairman Jerome Powell gave the market the message it wanted to hear – while US rates have not hit the top of the current cycle, the central bank will proceed with caution. That was enough to convince investors to keep bidding up shares in the mega cap tech names, which in turn gave a near 1% lift to the Nasdaq last night,” said Danni Hewson, head of financial analysis at AJ Bell.
Ocado
Ocado shares were the FTSE 100’s top faller after soaring on takeover speculation yesterday. The Times yesterday reported Amazon could be considering an 800p per share offer for Ocado, sending shares in food retailer and technology company over 30% higher.
The absence of any announcement today from either party saw Ocado shares down over 8% at the time of writing.