The UK’s most eminent stock indexes slipped on Friday in the midst of a souring of global sentiment. This is the end of a week in Britain marked by political turmoil, alongside soaring energy prices in Europe and some hawkish comments from very prominent central banks.
There was a dip of 0.01% in the blue-chip FTSE 100 and a o.4% slide in the domestically oriented FTSE midcap index.
Global markets were gripped by risk aversion after the news that former Japanese Prime Minister Shinzo Abe was injured in a shooting.
Meanwhile, investors awaited data around jobs in the USA that may offer some clues about the rate hike plans being lined up by the Federal Reserve.
Concerns About The Pound
There was a subsequent weakening of the pound following the brief gains made on Thursday.
This came about in the wake of Boris Johnson announcing he will be stepping down as leader of the Conservative Party and, therefore, the British Prime Minister.
The currency had sunk to a two-year low against the dollar earlier this week as the ongoing political chaos and fears surrounding economic growth continued.
Javier Corominas, the director of global macro strategy at Oxford Economics, was quoted as saying that he sees a “partial policy vacuum“.
He notes that this is a problem during a period when there is real stagnation in the economy and the budget is unlikely to be presented until late in Q4.
The consequence will be an increasing focus on the Bank of England, meaning the changes of a step-up in the pace of rate hikes will be lower as a ‘wait and see’ approach is adopted.
A recent survey revealed that British employers appeared to slow their rate of hiring via recruitment agencies in June. vacancies increased at the slowest rate in more than a year, indicating that the inflationary heat we have seen in the labour market is beginning to dissipate.
The FTSE 100 was dragged down the most by shares of global miners like Anglo American and Rio Tinto.
Metal prices have been sliding on concerns about flare-ups of COVID-19 in China.
There was a 2% rise for Housebuilder Vistry Group Plc after it forecasted a significant rise in gross margins for fiscal 2022. This is a result of strong demand throughout its businesses.