FTSE 100 dips as US FED minutes signal hawkish stance

The FTSE 100 opened in negative territory, declining by 57.06 points or 0.8% to reach 7,385.04. Similarly, the FTSE 250 dropped by 118.41 points or 0.8% to stand at 18,274.92, while the AIM All-Share slipped by 5.01 points or 0.7% to 747.36.

During the June meeting of the Federal Open Market Committee, minutes revealed that Federal Reserve officials signalled their intention to resume interest rate hikes, believing that additional tightening is necessary to control inflation in the world’s largest economy.

The minutes disclosed that “almost all participants noted in their economic projections that they judged further increases in the target federal funds rate during 2023 to be appropriate.” Despite this sentiment, officials decided to hold the target range steady in June to allow for further evaluation of relevant data.

Within the FTSE 100, United Utilities and Severn Trent witnessed gains of 2.8% and 1.8% respectively. The water utilities sector showed signs of recovery after experiencing significant double-digit percentage declines in the past month, primarily due to the ongoing crisis at Thames Water.

In contrast, abrdn experienced an early-morning decline of 2.2%. The Edinburgh-based investment and asset management firm announced its ambitious target of achieving a mid-single-digit compound annual growth rate in its total customer base over the next five years. However, the company expects a subdued outlook for 2023 due to prevailing market conditions.

Looking at the FTSE 250, Currys, an electronics retailer, saw a significant drop of 12% due to a year of mixed performance, resulting in its decision to not distribute a final dividend. The company’s annual adjusted pretax profit was within the upper range of its guidance, but its statutory pretax profit suffered a loss of £450 million, compared to a profit of £126 million. Additionally, revenue experienced a decline of 6.2%, dropping from £10.14 billion to £9.51 billion.

Jet2 faced an 11% decrease in the AIM market, despite strong trading results. Additionally, the group announced the departure of its executive chair. However, Jet2’s revenue saw a year-on-year increase, reaching £5.03 billion from £1.2 billion, marking a 40% growth compared to the previous financial year of 2020. The company also saw a significant improvement in pretax profit, going from a loss of £388.8 million to a profit of £371.0 million. Jet2 declared a final dividend of 8.0 pence, which is a contrast to not paying a dividend in the previous year.