FTSE 100 trades sideways as global interest rates considered

The FTSE 100 was flat on Thursday as markets weighed the latest moves by the Canadian and Australian central banks to raise interest rates.

The FTSE 100 was trading down 1 point to 7,622 at the time of writing.

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Investors had been looking forward to a pause in US rate hikes, but the decision by the two central banks to increase rates raises concerns about the Federal Reserves decision next week.

Equity markets have rallied this year on a Fed ‘pivot’ away from rate hikes.

“Canada and Australia don’t often have a central role in moving the markets, but the decision by both countries’ central banks to resume rate hikes this week has reverberated through the financial system and helped stoke fears about sticky inflation,” said AJ Bell investment director Russ Mould.

“Much of the narrative sustaining the uneven if material rally in stocks this year has been that the battle with inflation is nearly won by the central banks. If the Federal Reserve follows the lead of its Australian and Canadian counterparts then this could be badly undermined and the next Fed decision is now just a week away.”

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The UK housing market was dealt another blow with a downbeat assessment of the UK property market by the Royal Institution of Chartered Surveyors.

“The monthly report by the Royal Institution of Chartered Surveyors (RICS) mirrors the gloom seen in yesterday’s house price data by Halifax although there were a few glimmers of hope,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“The fall in buyer enquiries was the lowest seen over twelve months although was still down 18%. The rate of decline in agreed sales also fell sharply. The report warned that “storm clouds are gathered’’, with the UK’s stubbornly high inflation undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises.”

FTSE 100 movers

The benign trade in the FTSE 100 index was reflected in little movement by its constituents.

Hargreaves Lansdown was the FTSE 100’s top riser, up 2%, as the stock broke to the highest levels since early March.

Stocks trading ex-dividend dominated the fallers, with Sainsburys and Vodafone trading without eligibility for their upcoming dividend payments.

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