Investors jittery over US interest rate rises

Investors ended the week on a cautious note with markets falling as fears build over just how much the US Federal Reserve will need to bump interest rates to combat rising inflation.

Economic news from the US tends to filter down throughout Europe, and the start of the country’s banking reporting season did little to calm nerves.

This included the FTSE 100, which closed the day down 20.9 points, or 0.28%, at 7542.95 – although it was up on the start of the week.

JPMorgan was the first US bank to announce results and said on Friday profits were strong, although investors were unimpressed.

Chris Beauchamp, chief market analyst at IG, explained: “Investors appear to be in a mood to look for negatives in this round of earnings updates, if today’s from JPMorgan are anything to go by.

“Profits were up, but so were costs, and the bank couldn’t resist the opportunity to opine on what it thinks the Fed will do too, in this case going for a rather extreme ‘six or seven’ rate hikes for the year.

“In a world of higher rates, investors are going to be more demanding when it comes to company performance, and JPMorgan has felt the brunt of that today, down 5% in afternoon trading.”

European markets also felt the brunt from the US, with the French CAC closing down 0.81% and German Dax down 1.02%.

A pound was worth 1.367 dollars and 1.198 euros as markets closed.

In company news, it was a quieter day following a busy Super Thursday with several retailers reporting Christmas trading.

In a strong week for the high street, Currys dampened spirits with warnings that the technology market was challenging over Christmas, with uneven customer demand and supply disruption.

For the 10 weeks that ended January 8, group like-for-like revenue fell 5% compared to growth of 4% two years before. Investors voted with their feet, with shares closing down 7.7p, or 6.9%, to 104.7p.

Elsewhere, B&M saw its shares fall 31.8p, or 5.3%, to 564.8p as it was revealed founders Simon and Bobby Arora sold £234 million of shares via their Luxembourg-based SSA Investments vehicle.

Cineworld revealed it saw a recovery in December, thanks to bumper audience numbers for the latest Spider-Man film.

UK box office sales last month were at 89% of pre-pandemic levels, with 91% at Cineworld’s US Regal chain.

Investors were impressed, sending shares up 1.56p to 40.35p – a jump of 4%.

Credit checking firm Experian raised its annual guidance for the second time in as many months, revealing revenues in the three months to the end of December were up 14% compared to a year ago.

But investors were concerned as shares closed down 76p to 3,077p.

The biggest risers on the FTSE 100 were Standard Chartered up 11.8p at 523.2p; British American Tobacco up 58p at 3,033p; Lloyds up 1p at 54.97p; Severn Trent up 40p at 2,891p and National Grid up 14.4p at 1,081p.

The biggest fallers were Royal Mail down 29.7p at 496.5p; B&M down 31.8p at 564.8p; Ocado down 74p at 1,445p; Rightmove down 32.8p at 692.8p and Halma down 123p at 2,657p.