FTSE recoils as interest rate cut speculation dampened
London’s top index moved 0.95%, or 72.62 points, lower to finish at 7,576.36.
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Your support makes all the difference.London’s markets took a step back on Friday amid cooling expectations over the potential for rate cuts in the coming months and weakness for pharmaceutical firms.
It came after the FTSE 100 had risen to an almost two-month high on Thursday amid dovish projections from the US Federal Reserve, after it had held interest rates.
More cautious statements from the Bank of England and European central bank had already tempered expectations for significant cuts to borrowing costs before the New York Fed sought to deflate excited traders further on Friday.
London’s top index moved 0.95%, or 72.62 points, lower to finish at 7,576.36.
The main drag on the UK index has been in the pharmaceutical sector after US Democrat Senator Elizabeth Warren fired a broadside at GSK, AstraZeneca, AbbVie and other drugs companies over what she termed their abuse of patent lockups
Elsewhere in Europe, the Dax index was flat for the day at the close and the Cac 40 closed up 0.28%.
Michael Hewson, chief market analyst at CMC Markets UK, said: “After the euphoria of the Powell pivot party on Wednesday we got a wake-up call from New York Fed president John Williams when he pushed back on market expectations of a March rate cut, saying it was premature to be even considering anything like that.
“European markets had already been struggling for gains even before Williams’ comments, with the FTSE 100 already in negative territory, with the Dax soon following suit in the wake of those remarks.
“The main drag on the UK index has been in the pharmaceutical sector after US Democrat Senator Elizabeth Warren fired a broadside at GSK, AstraZeneca, AbbVie and other drugs companies over what she termed their abuse of patent lockups.”
Stateside, the main US markets were mixed as the S&P 500 dipped slightly due to easing rate expectations.
Meanwhile, sterling lost ground against a strong dollar but was up on the euro, after the the Eurozone was dragged by weak flash PMI economic data for December.
The pound was down 0.4% at 1.271 US dollars but was 0.4% higher at 1.165 euros at market close in London.
In company news, GSK (GlaxoSmithKline) and AstraZeneca were in the red at the close after Dame Elizabeth Warren and Pramila Jayapal reportedly accused the drugs firms over using sham patents to drive prices higher.
In letters to the firms, the US politicians urged them to abandon “improperly or inaccurately” listed patents.
Shares in GSK fell 42.6p to 1,419.2p, while AstraZeneca fell 282p to 10,186p.
Shares in Trainline were at full steam on Friday after plans for a Government-backed online train ticket retailer were axed.
The Department for Transport first announced plans, which included a new website and app to sell tickets, in May 2021, which sent Trainline shares down by around a quarter at the time.
On Friday they rebounded, climbing 32.2p to 316.4p.
The price of oil edged marginally lower but still registered its first weekly gain for seven weeks.
A barrel of Brent crude dropped by 0.22% to 76.41 US dollars (£60.16) as markets were closing in London.
The biggest risers on the FTSE 100 were Spirax-Sarco, up 265p to 10,300p, DS Smith, up 7.3p to 309.6p, Entain, up 18.6p to 938.6p, Anglo American, up 28.6p to 1,824p, and Glencore, up 7.1p to 460.85p.
The biggest fallers on the FTSE 100 were St James’s Place, down 33.4p to 677.6p, Auto Trader, down 33.4p to 697.2p, Hargreaves Lansdown, down 27.6p to 720.6p, Smith & Nephew, down 37.5p to 1,044.5p, and Rolls-Royce, down 9.9p to 290.1p.