The FTSE 100 was weaker on Monday as the first trading session of October reflected nagging concerns about interest rates remaining higher for longer.
The FTSE 100 was down 0.79% to 7,547 at the time of writing.
“It’s been a testing time for markets as investors weigh up the likelihood of sticky inflation and interest rates remaining higher for longer. There is a balancing act for central banks – they want to fight inflation but equally they want to avoid being too aggressive with rate hikes and putting their economy into recession,” said AJ Bell’s Russ Mould.
Mould continued to explain that although central banks have suggested rates may stay at elevated levels for a prolonged period, policymakers will continue to base their decisions on economic data and upcoming interest rate decisions will be dictated by the health of the underlying economy.
“Data has been central to their decision-making and this week will see the release of some important figures shedding light on the state of one key economy.”
Persistent interest rate fears have hit some sectors more than others in 2023 and the most interest rate-sensitive sectors were again leading the declines on Monday. Housebuilders and construction companies were among the heaviest hit.
There were few FTSE 100 gainers on Monday and the selling was broad and indiscriminate. Diploma was the FTSE 100’s top faller, down 3.6%, while Beazley shed 3.2%.
There were gains for United Utilities as the company joined Severn Trent and Pennon Group in unveiling five-years plans to improve their infrastructure.