LONDON, Jan 7 ― UK shares dropped yesterday, tracking a fall in global equity markets after minutes of the US Federal Reserve's December meeting showed the central bank's hawkish stance toward interest rate hikes as it looks to tame high inflation.
The FTSE 100 ended 0.9 per cent lower, with industrial and healthcare stocks being the top drags, down 2.6 per cent and 1.3 per cent respectively.
Global equities sold off after it emerged that US central bank policymakers said in their meeting last month that a “very tight” job market and unabated inflation might require the Fed to raise interest rates sooner than expected.
Banking stocks gained 2.1 per cent as UK 10-year yields rose, fuelled by rate hike expectations.
“If you're looking for a value play at the moment, the UK is quite attractive,” said Oliver Blackbourn, portfolio manager at Janus Henderson Investors.
“It tends to do well in these sorts of environments because of factors like its currency which tends to be sort of risk-on and also the mix of sectors in the UK market today is really helping.”
The FTSE 100 gained 14.3 per cent in 2021, lagging European and US peers, but Blackbourn said he expects UK stocks to start catching up as markets move toward more value-oriented segments from growth sectors such as technology.
The domestically focussed mid-cap index declined 1.5 per cent, with travel and leisure stocks falling 1.6 per cent.
Britain's services sector grew in December at the slowest pace since the country was last in lockdown, as the spread of the Omicron variant of the coronavirus hammered hospitality and travel, a survey showed.
Three leading British retailers Next, Greggs, and B&M yesterday underscored the threat they face from inflation this year, with their bosses battling to remain competitive as consumer finances come under pressure and prices surge.
Dr. Martens slumped 10.7 per cent after bookrunner Goldman Sachs International said Permira Funds sold about 65 million shares of the boot maker.
Food-to-go retailer Greggs fell 8.0 per cent after saying surging cases of Omicron were putting pressure on its store staff, though it was manageable from a business perspective. ― Reuters