FTSE drops ahead of Bank of England and Federal Reserve rates decisions

Shares in the index had traded up during most of the day, but fell just ahead of close.

Interest rates are widely expected to peak, with traders now wondering when Bank of England Governor Andrew Bailey might start cutting rates (Hannah McKay/PA) (PA Wire)

Despite trading up for most of Wednesday, London’s FTSE 100 ended the day firmly in the red as traders around the world await interest rate decisions from Washington and London.

In its last trading day before the US Federal Reserve decides whether it might be time to at least signal when interest rate cuts could be expected, the index fell 35.74 points, or 0.47%, to end the day at 7,630.57.

On Thursday at midday the Bank of England’s Monetary Policy Committee will also report on its decision on rates.

“Today’s Fed decision is eagerly awaited by investors who are desperate to see what the Fed will hint at regarding the first rate cut,” said Chris Beauchamp, chief market analyst at online trading platform IG.

“Much of the ebullient risk appetite we have seen over the past three months has been built on the expectation that the Fed will cut several times this year.

“Given how heavy the selling in (Google owner) Alphabet has been it looks like markets could get quite ugly if the Fed strikes a hawkish tone.”

At the end of the day in Europe, Frankfurt’s Dax index fell 0.40%, while the Cac 40 in Paris had closed down 0.27%.

In New York a little while after markets had closed in Europe the S&P 500 was trading down 0.86%, while the Dow Jones was 0.01% higher

On currency markets the pound had gained 0.23% against the dollar at 1.273 and had risen 0.14% against the euro at 1.1726.

In company news, shares in Vodafone closed 2.08% lower after it was revealed that the company has rejected a proposal from France’s Iliad to combine their Italian businesses.

Iliad said that Vodafone had “failed to accept” the multi-billion pound offer which it believes “was the best possible business combination to benefit a struggling Italian market and telecommunications industry.”

Elsewhere shares in GSK rose 1.97% after the business hiked its profit outlook on the back of higher annual sales and profit.

A new vaccine for respiratory syncytial virus (RSV) has helped push up pre-tax profits by 14% to £6.1 billion, when accounting for currency movements.

Sales are now expected to rise 5-7% and earnings 7-10% in 2024.

The biggest risers on the FTSE 100 were Croda, up 219p to 4,805p, GSK, up 30.2p to 1,568p, Antofagasta, up 29p to 1,735p, Severn Trent, up 38p to 2,598p, and Flutter Entertainment, up 215p to 16,285p.

The biggest fallers on the FTSE 100 were WPP, down 24.2p to 771.4p, Marks & Spencer, down 7.4p to 247.3p, M&G, down 5.6p to 224.1p, B&M European, down 11.6p to 518.6p, and Vodafone, down 1.43p to 67.32p.