Ahead of a potential 14th interest rate hike expected by the Bank of England, the FTSE 100 has seen a decrease. Early market activity reveals a 1.4pc dip in the UK’s top-tier stock index as market players eagerly await the interest rate decision, currently standing at 5pc.
Market consensus largely anticipates an increase of 0.25 percentage points in interest rates, spurred by lower-than-forecasted inflation in June, reported at 7.9pc.
The stock market also feels the impact of an unexpected move by Fitch Ratings to demote the US from its AAA credit rating pinnacle this past Tuesday.
Increased bond yields are exerting additional pressure on shares. This comes in the wake of the US revealing stronger-than-anticipated private employment statistics and a larger-than-expected US government debt auction announcement on Wednesday.
US bond yields have touched their highest in nine months, while the yield on the 10-year UK government bonds, known as gilts, has escalated by four basis points to 4.44pc.
With global markets in a downward spiral, Victoria Scholar, the head of investment at Interactive Investor, stated:
Following a plunge of over 1pc in the FTSE 100 yesterday, attributed to the global market sell-off due to Fitch’s downgrade of the US, European markets have opened in negative territory for the third consecutive day.
The previous night, Wall Street saw significant losses with the Nasdaq falling more than 2pc and the S&P 500 declining over 1.3pc. All eyes are now on the Bank of England, as the market anticipates the midday announcement on the potential interest rate hike.
Early trading has seen Germany’s Dax index and France’s CAC 40 both experiencing a 1.3pc drop.
