Another pretty dull start to the week in London as the FTSE 100 slipped on Monday, dragged down by a sharp fall in Unilever and a cautious tone ahead of Wednesday’s US interest rate decision.
The FTSE 100 closed down 0.2% at 9,645.09. The FTSE 250 fell 0.7% and the AIM All-Share dropped 0.4% to 748.52.
Much like last week, trading was subdued with investors reluctant to take positions before the Federal Reserve’s policy call. The US central bank is expected to deliver a third straight 25bps cut, lowering the fed funds range to 3.5% to 3.75% in what could be a contentious meeting. Goldman Sachs said the case for a cut is solid, while Barclays is bracing for a more hawkish tone.
Wall Street was softer at the London close. The Dow and S&P 500 were both down 0.3%, with the Nasdaq off 0.2%, underscoring the risk-off mood.
In the FTSE 100, Unilever tumbled 6.6% as Magnum Ice Cream began trading separately in Amsterdam, London and New York. Shares in the newly listed business rose 1.3% in Amsterdam from a €12.80 reference price, implying a valuation of €7.94 billion, although that fell short of some forecasts. The split left pressure on Unilever’s remaining business and weighed on the wider index.
Housebuilders were another soft spot as UK bond yields climbed. Barratt Redrow slipped 4.0% and Persimmon lost 3.5%.
Defence names provided some relief. Babcock International rose 2.6% and BAE Systems gained 1.1%. Rolls Royce added 2.1% after receiving an order from KNDS for more than 300 engines for Leopard 2 battle tanks.
In the FTSE 250, Kainos jumped 6.6% after Bank of America double upgraded the stock to buy from underperform. Baltic Classifieds rebounded 5.9% after last week’s slump following a downbeat update.