London shares finished mixed on Wednesday as blue-chip weakness tied to rate uncertainty and a slide in Associated British Foods weighed on sentiment, while mid-caps found stronger footing and carried the FTSE 250 higher through the session.
The FTSE 100 closed down 0.2% at 10,478.34, slipping under pressure from defensive positioning, while the FTSE 250 moved against the grain, climbing 1.4% to 23,330.07 as investors rotated into mid-cap exposure.
Across Europe, the tone was similarly uneven with Paris’s CAC 40 falling 0.8% and Frankfurt’s DAX 40 edging up 0.2%, as markets continued to struggle to settle on direction amid shifting interest rate expectations.
In the US, equities softened as the new quarter began with investors weighing comments from Federal Reserve official Kevin Warsh, the Dow Jones slipped below the flatline after a record finish in the previous session, the S&P 500 eased 0.2% and the Nasdaq Composite fell 0.6% as semiconductor names lost momentum.
Attention remains fixed on the prospect of higher rates later in the year rather than the immediate July meeting, with US Treasury yields moving higher, the 10-year rising to 4.47% from 4.40% and the 30-year lifting to 4.97% from 4.89%, reinforcing the view that borrowing costs may stay elevated for longer.
Warsh struck a restrained tone at a European Central Bank forum in Portugal, stating that the Federal Reserve’s priority remains price stability while offering little detail on the timing of any policy shift, a message that left markets with limited clarity and sustained sensitivity to inflation signals.
In London, defence group Babcock International was among the strongest performers, rising 5.2% as investors reassessed the outlook for UK defence spending and its implications for contract flow, while J Sainsbury added 3.4% after its recent trading update continued to feed into supportive sentiment around the supermarket sector.
To the downside, Associated British Foods came under pressure, falling 3.2% after a weaker update from Primark, where like-for-like sales dropped 2.2% in the third quarter, an improvement from earlier declines but still signalling subdued demand, with UK and Ireland sales broadly flat at minus 0.2% and Europe down 3.6%.
The group also flagged further strain in its sugar business, now expected to post an adjusted operating loss of £25 million to £60 million in 2026, widening expectations compared with a £22 million loss forecast cited by Citi, extending a downward revision already outlined earlier in the year.