The FTSE 100 plunged on Friday as major UK assets sank. The FTSE 100 shed 1.97% while GBP/USD hit fresh lows as bond yields jumped.

GBP/USD was trading near the lows of 1.0900, down 2.9%, at the time of writing.

Investors dumped UK assets after the government unveiled their mini-budget without the usual economic forecasts attached to new measures which will cut taxes dramatically and increasing spending.

The FTSE 100’s inverse relationship with the pound was not enough to support the index on a day the entire global equity universe was under pressure.

London’s leading index slipped below 7,000 for the first time since June in a broad selloff that tracked a global equity move to the downside.

However, analysts were upbeat about the longer term prospects for the FTSE 100 given the composition of the index and weakness in the pound.

“Moreover, in aggregate, around three quarters of revenues of FTSE 100 companies are made outside of the UK, much of which is in US Dollars. In the near term, as overseas earnings are translated back into Sterling reported profits and dividends this should be supportive,” said Jason Hollands, Managing Director at Bestinvest.

Hollands also pointed to the strong yields investors are able to achieve in UK stocks.

“Valuations of UK blue-chip equities also look attractive overall both compared to other developed markets and their own long-term trend. They also provide a relatively attractive dividend yield of c. 4%, which is more than double the dividend yield of global equities.”

Cyclical selling

There was very little green in the FTSE 100 on Friday with many cyclical stocks falling heavily. Miners were particularly heavily hit as were banking stocks.

Natwest was down 6% at the close on Friday and Lloyds shed 3.6%, despite the Bank of England raising rates 0.5% yesterday and markets pricing in more rate hikes on the horizon.

Tekcapital’s portfolio company MicroSalt is set to launch a new range of innovative low-sodium products designed to reduce the health issues associated with high salt intake.

High salt intake is thought to cause 100,000 deaths a year in the US alone and be a major factor in millions more cases of high blood pressure.

MicroSalt’s new products are set to compliment initiatives by governments in the fight against deaths caused by high salt, especially the FDA’s drive to help reduce sodium intake. The FDA has conducted comprehensive studies into the impact of sodium and found huge numbers of people consume too much sodium.

To help lower the intake of sound by Americans, MicroSalt® is launching its new table salt shakers that will be unveiled at Expo the East Food convention in Philadelphia with sales beginning 1st October.

MicroSalt will distribute the new products through UNFI, North America’s premier food wholesaler and will list on Amazon.

After launching in the US this year, focus will move to UK, Western Europe and Canada in 2023.

“We are proud to be able to bring such an essential product to consumers nationwide. Sodium is one of the leading contributors to hypertension and these shakers can help minimize the negative impact that excess sodium consumption has on human health,” says Rick Guiney, CEO of MicroSalt®.

Tekcapital shares jumped 6% in early trade on Friday.

The Bank of England has hiked rates by 50 bps to 2.25%, meeting analyst estimates, but disappointing some hawkish market participants.

In what has been a busy week for central bank action, the FTSE 100 had started the day on the back foot after the Federal Reserve raised US rates by 0.75% to 3.25%.

FTSE 100 recovers

The FTSE 100 had touched lows of 7,158 early on Thursday before recovering to trade 7,207 shortly after the decision to hike UK rates at midday.

Despite the shift in UK rates, the market’s focus will remain on the Federal Reserve and how they plan to raise US rates to help battle inflation.

“While the 75-basis point rise in US rates was largely expected, particularly after US inflation proved stickier than hoped in August, the messaging around the decision helped put markets in a tizz overnight,” says AJ Bell investment director, Russ Mould.

Although the Fed hiked rates by a bumper 0.75%, the main concern in markets was the future trajectory of rates and how much more stress the global economy was set to suffer in the future.

“The risks for financial markets are threefold. First, there remains uncertainty over when the Fed ends this rate hiking cycle. Second, the pace of the increase creates further risk for markets. Third, the economic consequences – which are experienced with a 12 to 18-month lag – will depend on the level and pace of hikes,” said Daniel Casali, Chief Investment Strategist at wealth manager Evelyn Partners.

JD Sports

JD Sports shares were the biggest casualty on the FTSE 100 after the sports retailer’s profits fell and they told investors the board were cautious on costs going through the rest of 2022. Despite revenue jumping, operating profit fell to £332.9m, falling from £396.8m in the same period a year prior.

JD Sports shares were 6.3% weaker at the time of writing.

Miners provided some support for the FTSE 100 as bargain hunters stepped in to pick commodities stocks that have felt the concerns around slowing growth and disruptions to the Chinese economy. Rio Tinto and Anglo American were both 1.3% to the good.

UK Banks

UK banks have welcomed the prospect of higher rates this week and the immediate reaction saw a dip in the UK’s banks, although they remained in positive territory.

Lloyds and Barclays were 0.3% and 0.6% higher at the time of writing, after being higher earlier in the session.