The FTSE 100 was flat on Wednesday as investors realigned their portfolios after a sharp rally yesterday.
Sentiment improved dramatically yesterday after comments from Federal Reserve officials dispelled fears around interest rates and China stimulus hopes lifted stocked.
On Wednesday, investors took a step back awaiting further developments and focused on portfolio composition.
The FTSE 100 was up just 3 points going into the close on Wednesday.
“The surge of optimism, fuelled by hopes the Fed will go easier with its interest rate policies and buoyed by expectations of fresh stimulus in China, appears to have plateaued,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“A little more caution is returning, as investors look ahead to tomorrow’s snapshot of inflation in the United States. The surge in equities was fuelled by comments from Fed decision makers indicating a careful policy approach given sharp rise in borrowing costs. But the rally appears to be taking a breather for now.”
There was a definite leaning towards defensive stocks on Wednesday with utilities and tobacco stocks among the top risers. Imperial Brands and BT were among the better performers, both adding around 1.5%.
SSE enjoyed a 1.3% rise and United Utilities jumped 1.6%.
Bargain hunters were also out in force for financials impacted by interest rate expectations. M&G rose 2% while Barclays and Hargreaves Lansdown had a solid session.