London’s FTSE 100 slumps despite US debt ceiling breakthrough
Investors on both sides of the Atlantic did not appear to be buoyant about the news pf progress on the debt default.
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Your support makes all the difference.London’s FTSE 100 dived on Tuesday as a breakthrough in US debt ceiling negotiations failed to lift the downbeat investor mood.
Consumer staples and energy stocks were pulling on the blue-chip index with Unilever sinking toward the bottom, and Shell lagging closely behind.
US president Joe Biden and house speaker Kevin McCarthy reached a final agreement on Monday on a long-awaited deal that has sparked fears the government could default on its debt for the first time in its history.
But the deal to raise the nation’s debt ceiling is far from done and dusted yet, as it must be approved by Congress where it is expected to face criticism.
Investors on both sides of the Atlantic did not appear to be buoyant about the news, on a shorter week of trading because of public holidays in the UK and US.
The FTSE 100 closed 105.13 points lower, or 1.38%, at 7,522.07.
In the US, the S&P 500 edged up by 0.15% and Dow Jones was down 0.4% by the time European markets closed.
It also came as new food inflation figures showed prices remained elevated in May, as the Government faces a backlash from retailers over plans to encourage supermarkets to voluntarily put price caps on food staples to help with the cost of living.
Michael Hewson, chief market analyst at CMC Markets UK, said: “While one can sympathise with the Government’s desire to ease the cost of living, they might want to look a little closer to home as to the reasons why prices in general are as high as they are, starting with domestic energy policy, which has been a cornucopia of policy failures over the last 20 years.
“In any case, price controls have never worked as the UK’s experience of the 1970s will testify and only serve to drive scarcity, which keeps prices higher for longer,” he added.
The pound was holding firm on Tuesday, lifting 0.4% against the US dollar to 1.2401, and up 0.3% against the euro to 1.1567.
Other European stocks started the week in the red, with the German Dax down 0.27% and the French Cac 1.29% lower at close.
In company news, ITV’s share price dropped nearly 2% at the start of the day amid speculation around former This Morning’s presenter Philiip Schofield’s departure and the knock-on impact for the broadcaster.
Analysts dismissed the saga as “noise” clouding the company and said it was more likely to be a short-term hiccup rather than a long-term problem for ITV and its share price. Nevertheless, shares were down 0.75% at close.
In better news, food manufacturer Greencore saw its share price jump after revealing its revenues surged by a fifth in its latest financial half-year.
The pre-packaged sandwich maker said the jump partially came from price rises as it passed through cost inflation of about 15%. Shares in Greencore climbed by 4.3%.
Shares in Hollywood Bowl enjoyed a modest uplift after the bowling alley chain pledged to limit price rises in a bid to keep its entertainment venues affordable for families.
It came as the firm reported record revenues for the six months to the end of March and told investors it was confident in “resilient demand” from customers. Its share price closed 1.15% higher.
The biggest risers on the FTSE 100 were: Frasers Group, up 18p to 690p; B&M European Value Retail, up 9.9p to 471.0p; Hargreaves Lansdown, up 14.2p to 814.6p; JD Sports, up 2.45p to 153.45p; and Whitbread, up 50p to 3,307p.
The biggest fallers on the FTSE 100 were: Ocado Group, down 15.1p to 391.9p; Rolls-Royce Holdings, down 4.65p to 144.4p; Shell, down 70.5p to 2,282p; Unilever, down 124p to 4,405p; and Johnson Matthey, down 49p to 1,741p.