The FTSE 350 remained steady most of Thursday, before dipping after interest rates were hiked again. All eyes on Friday will be on the mini-budget.
Interest rate reaction
The Bank of England’s Monetary Policy Committee chose to lift interest rates by 0.5% Thursday, to reach a 14-year high. Speculation had grown through the day that the hike could reach 0.75%.
The FTSE 100 dipped after the announcement, losing 78 points to end the day down 1.1% at 7,160. JD Sports Fashion was the biggest faller in the top index, dropping 8.4%, but that was down to disappointing interim results.
The FTSE 350 fell 1.2%, losing 49 points to finish Thursday at 3,959. We could see further interest rate effects Friday, though that should be quickly overshadowed by the mini-budget.
Commentators have been talking about growth fears in the US, but American stocks had a relatively gentle day Thursday.
The S&P 500 declined by 0.8%, which is a fairly modest drop compared to the bigger swings we’ve been seeing all week. Technology stocks on the Nasdaq had a slightly tougher day, falling 1.4%.
Will US calm help keep UK markets cooler on Friday?
The big Friday event is the mini-budget. New chancellor Kwasi Kwarteng is due to outline the government’s plans at 09:30, and people have been speculating over what he might change.
Some kind of tax cuts seem to be the favourites, with company tax and stamp duty high on many pundits’ lists. It’s already been confirmed that the recent National Insurance rise will be reversed.
We might even see the cap on bankers’ bonuses ended, so we’ll have to see if that has any effect on financial stocks.
There’s not a lot of company news coming Friday. But final dividend payments should be on their way to Auto Trader Group shareholders.
It’s also interim dividend payment date for a number of companies. They include Anglo American and SEGRO in the FTSE 100. FTSE 250 stocks RHI Magnesita, Rotork, St James’s Place, and Hochschild Mining are among those paying too.
Oil and gold
The gold price has been edging up all week, as investors head increasingly for safer havens. The escalation of the Ukraine war possibly has something to do with it. At the time of writing, gold stands at $1,672 per ounce.
Oil, meanwhile, is declining slowly. Brent crude dipped below $90 per barrel, but is priced at $90.46 at the time of writing.
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The Motley Fool UK has recommended Auto Trader and Rotork. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.