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.

Ithican Energy shares surged on Wednesday after the UK government gave the green light for the development of the Rosebank oil field off the Shetland Islands.

Ithaca Energy has a 20% stake in Rosebank, the largest undeveloped oil field in the UK.

Ithaca Energy and Equinor have announced a £3.8 billion investment in the first phase of the Rosebank oil field development northwest of Shetland. The North Sea Transition Authority granted approval on 27 September.

Rosebank holds an estimated 300 million barrels of recoverable oil, with 245 million targeted in Phase 1. The field will use subsea wells tied to a redeployed floating production, storage and offloading (FSPO) vessel. First oil is expected in 2026-2027.

At peak, the £8.1 billion project should create around 1,600 UK construction jobs and 450 long-term UK roles. Major contracts include a £500 million subsea deal for TechnipFMC, a £328 million Odfjell rig contract, and an Altera FPSO charter.

The field lies 130 kilometres northwest of Shetland with estimated recoverable resources of 300 million barrels. Phase 1 targets 245 million barrels.

The FPSO will enable first production in 2026-2027. Rosebank should produce over 21 million standard cubic feet of natural gas daily, comparable to Aberdeen’s usage.

The development is forecast to spur £8.1 billion in investment, 78% within the UK. Around 1,600 construction roles and 450 longer-term UK jobs are expected.

Gilad Myerson, Executive Chairman, Ithaca Energy, commented:

“We are delighted to announce the decision to move forward with the Rosebank development alongside Equinor. Rosebank stands as the largest undeveloped field in the UK, and with the receipt of development consent from the NSTA, we are now poised to embark on a journey that will not only provide critically important domestic energy but also ignite substantial economic impact. The Rosebank project will create thousands of jobs and contribute significantly to securing the UK’s energy needs for many years to come.”

Ithaca Energy shares were 8% higher at the time of writing.

The FTSE 100 clawed back early losses on Tuesday as investors shook off more concerns about China and realigned portfolios after a busy period for central banks.

Apart from the FTSE 100’s miners, there were no clear sector gainers or losers on Tuesday suggesting investors had their stock picking hats on as the furore around interest rate decisions died down.

There was a stark contrast in the performance of individual stocks within certain sectors on Tuesday as investors picked out their sector favourites.

For example, Barclays was the FTSE 100’s top riser, gaining 3%, while Lloyds and Natwest fell marginally on the day.

Sainsbury’s was the top faller with losses of 3.5% as Tesco managed to remain positive. Housebuilder Berkeley Group Holdings were out of favour with 2% drop while Taylor Wimpey and Barratt Developments recorded small gains.

A broker upgrade helped lift Kingfisher 1.2%. Investec analysts turned bullish on Kingfisher upgrading the stocks to ‘buy’ from ‘hold’ with a price target of 255p.

While there were some positive individual moves and the index crept higher, lurking in the background were underlying concerns about what was happening in China’s property market and the US credit rating.

“Investors remain understandably wary about China’s troubled property sector and while Wall Street regained some poise overnight, the threat of a government shutdown is creating nervousness across the Atlantic too,” said AJ Bell investment director Russ Mould.

“Moody’s has warned about a possible downgrade for the credit rating of the world’s largest economy, yet another thing for the markets to fret about. And the message of higher rates for longer doesn’t seem to be going away.”