Today was a rough day for UK markets, with the FTSE 100 falling sharply by 1% to close at 8,283.36. The mid-cap FTSE 250 didn’t fare much better, dropping 0.7% to 21,459.23.
The day started on a positive note after the Bank of England cut interest rates for the first time since 2020, lowering the bank rate to 5%. This move was meant to ease the pressure on borrowers while acknowledging progress in taming inflation.
However, the mood soured quickly when data from across the pond showed the US manufacturing sector contracting in July. This raised alarm bells about a potential economic slowdown in the world’s largest economy, sending ripples through global markets.
Banking stocks took a particular beating, with HSBC, NatWest, Lloyds, and Standard Chartered all seeing significant drops. Investors worried that lower interest rates might squeeze banks’ profit margins.
It wasn’t all doom and gloom, though. Rolls-Royce shares soared 6.6% after the company announced plans to restart dividend payments and raised its guidance. Retailer Next also had a good day, with its shares climbing 8.3% following better-than-expected sales figures.
Coats Group was another bright spot, with its shares jumping 13%. The company cited a recovery in the footwear and apparel sectors and raised its interim dividend by 15%.
Looking ahead, markets will be keeping a close eye on Friday’s results from British Airways owner IAG. Additionally, Friday’s economic calendar sees the crucial US jobs report due at 13:30 GMT, which could provide further insight into the health of the US economy.
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