The FTSE 100 lagged behind US stocks again on Wednesday as concerns about interest rates weighed on sentiment, and declines for Imperial Brands and Compass Group offset gains in BAE Systems.
The S&P 500 added another 0.7% yesterday to take the index 0.3% higher on the year. The rally was led by the world’s largest tech shares, with Nvidia rallying 5% and Palantir jumping 8%.
However, concerns about interest rates in the UK prevented London’s leading index from absorbing enthusiasm radiating from the US.
The FTSE 100 was just about positive, adding 0.1%, at the time of writing.
“Stocks stateside have gone on a run as more trade deals are inked, but the baton hasn’t been passed to the FTSE 100, which is flat in early trade,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The more cautious sentiment may partly have been prompted by concerns that interest rates look set to stay higher for longer in the UK. Bank of England policymakers have been striking notes of wariness about the risk that inflation may stay stubbornly above target.”
Imperial Brand was the FTSE 100’s top faller after currency swings sent reported revenue 3.1% lower and operating profit down by 2.5% in the six months to 31st March. However, it was the news that the CEO was stepping down which caused shares to drop by over 7%. The group enjoyed constant currency growth across all regions.
Gold shares were again among the losers as ongoing improvements in trade relations between the US and key partners further reduced the interest in gold mining stocks. Endeavour Mining fell 0.7% while Fresnillo gave up 0.1% on Wednesday.
“Despite yesterday’s rebound, gold continues to show clear signs of short-term weakness. The precious metal is now trading steadily below $3,300/oz as key drivers in recent weeks — including trade tensions and inflationary pressure — have simultaneously shown signs of easing,” said Linh Tran, Market Analyst at XS.com.
Compass Group shares were down 4% after the food group announced reasonable first-half sales growth but opted to invest cash back into the business and hold off fresh share buybacks.
BAE Systems was the FTSE 100 top riser after Saudi Arabia demonstrated its defence spending power through a deal with the US. BAE Systems shares were 2% higher at the time of writing.