The FTSE 100 swung between gains and losses on Wednesday as investors weighed the prospect of higher interest rates for a longer period, poor economic data, and the impact of oil on inflation.
The FTSE 100 was down 0.3% at the time of writing on Wednesday.
“The looming threat of a government shutdown in the US, a weak consumer confidence reading overnight and continued industrial action by the country’s auto workers are creating a mood of instability which, when added to the strong hints that rates will stay elevated for an extended period, is not a happy cocktail for stocks,” said AJ Bell investment director Russ Mould.
The S&P 500 closed 1.5% lower overnight, one of the worst daily declines of 2023. US stocks started Wednesday’s session firmly higher but the rally faded as the session progressed.
The S&P 500 was 0.2% higher shortly after 3pm on Wednesday. How US stocks perform overnight could have a major impact on European shares tomorrow as global stocks struggle to find a bid.
“Nerves are frayed about the impact of high interest rates in the United States, while fragility in China is showing up once again,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
IMI plc was the FTSE 100’s top riser with a 4% surge while a splattering of miners and natural resources made tepid gains.
Ocado was the top loser shedding 8% as the premium retailer was broke to the lowest levels since being downgraded by Exane last week.