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UK stocks fall as hawkish Fed triggers global sell-off

© Reuters. FILE PHOTO: British pound coins are seen in front of displayed stock graph in this illustration taken, November 9, 2021. REUTERS/Dado Ruvic

By Bansari Mayur Kamdar

(Reuters) -UK shares dropped on Thursday, tracking a fall in global equity markets after minutes of the U.S. 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 fell 0.7% in morning trade, while several European peers dropped more than 1%. (EU)

Global equities sold off as U.S. 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, according to minutes released on Wednesday.

Banking stocks gained 0.5% as the UK 10-year yields rose, fuelled by rate hike expectations.

“If you’re looking for a value play at the moment, 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% in 2021, lagging European and U.S. 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 1.0%, with travel and leisure stocks falling 0.8%.

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.

Dr. Martens slumped 8.8% after bookrunner Goldman Sachs (NYSE:GS) International said Permira Funds sold about 65 million shares of the boot maker.

Food-to-go retailer Greggs fell 1.6% after saying surging cases of Omicron were putting pressure on its store staff, though it was manageable from a business perspective.

UK stocks fall as hawkish Fed triggers global sell-off

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