The UK benchmark index has fallen deep into the red in today’s session, with investors digesting the prospects of a new rate hike in December. British American Tobacco (LON:BATS), whose shares are going ex-dividend today, has been one of today’s most prominent FTSE 100 fallers.
FTSE 100 heads south
As of 12:35 BST, the Footsie had given up 64.98 points to stand 0.87 percent lower at 7,445.30. Sentiment has been subdued today following hawkish comments by Federal Reserve Chair Jerome Powell, who said that the central bank was a ‘long way’ from neutral on interest rates, as reported by CNBC.
“The market is now pricing in an 80-percent probability of a rate rise in December. Additionally, the markets are reassessing how far the Fed’s tightening cycle will go and expectations are for rate rises to continue for longer,” said Jasper Lawler, analyst at London Capital Group, as quoted by Proactive Investors.
Reuters meanwhile quoted Russ Mould an investment director at AJ Bell as saying in a note to clients that markets across “Europe and Asia tripped up on Thursday after a rise in US Treasury yields to levels not seen since 2011”.
“The Treasury yield is commonly seen as the risk-free rate for investing, so an increase tends to be negative for other asset classes including shares”, he pointed out.
BAT’s share price has fallen 2.39 percent to 3,437.00p, with the group’s shares trading without the attraction of their latest dividend in today’s session.
easyJet (LON:EZJ), which today updated investors on its September traffic, is 0.57 percent down at 1,210.50p, recovering some of the losses posted earlier in the session.
The FTSE 100 was 0.87 percent down at 7,445.09 points as of 12:55 BST on Thursday, 04 October 2018.