Miners Bring Down UK’s FTSE after Hawkish ECB

On Friday, the top stock index of the United Kingdom declined by nearly 1%, as miners were weighing the entire index down. This was after fresh COVID-19 curbs were announced in parts of Shanghai, China that weighed on miners. Meanwhile, GSK saw its shares climb, as a late-stage trial of its respiratory vaccine showed positive results for older adults. There was a 0.9% decline in the blue-chip FTSE 100 index, while a 1.0% decline was also recorded by the FTSE 250 index, which is focused on domestic stocks. The two indexes were set to close the week with 1.8% and 2% in losses, respectively.

ECB and Miners Take their Toll

While all sectors of the index were in the red, there was a 2.3% decline in miners because of a retreat in the industrial metals space. This was brought about due to the demand concerns that were rekindled after China announced fresh COVID-19 curbs. On Thursday, the European Central Bank (ECB) conducted its policy meeting in which it showed a hawkish stance for the first time.

The ECB said that they would hike up interest rates next from next month, making it the first time after 2011, and a larger hike is expected in September. Market analysts said that the equities and financial markets are weighed down because of inflation concerns. The decision of the ECB was a fresh reminder that inflation is rising and the cheap money journey is ending.

They further said that the ECB had an optimistic stance where growth was concerned, but there will be a downturn in the start of 2023 and end of 2022. The economy of the euro zone may come quite close to a recession.

Bank of England to Meet Next Week

In other news, the policy meeting of the Bank of England (BoE) is scheduled for the coming week. It is also expected to increase the interest rates, as it has been doing so since December. This will make it the fifth increase because of inflation that has reached almost 10%. Britain is gearing for a discontented environment, as labor strikes are in the works and cost of living has reached the highest in decades.

Investors are also keeping an eye on the US consumer price index (CPI) data that is due today, as this could shed some light on the tightening monetary policy of the US Federal Reserve for the next few months. The US central bank is also scheduled for its own policy meeting in the next week.

However, predictions indicate that the data will not dent the intentions of the Fed in terms of interest rate hike. It is not expected to hit pause anytime soon and may reconsider its decision in September.

There was a 1.1% increase in the shares of GSK, as the drugmaker announced the success of its vaccine developed for respiratory syncytial virus. The trial had been conducted in a late-stage and comprised of adults aged 60 and above.

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