FTSE 100 slips as investors remain cautious ahead of US rate changes

The London markets sank as investors remained cautious ahead of the Federal Reserve rates announcement set to be made in the US.

The FTSE 100 closed down 39.5 points at 7,403.54, at the end of trading on Wednesday.

The Fed is expected to keep rates on hold but also indicate a less hawkish outlook, which has seen the dollar weaken as a result.

This has seen the value of the pound lift higher and simultaneously press down on London’s leading markets.

A decline in Consumer Price Inflation also failed to deter pound traders, with the rate meeting the Bank of England’s 2% in target in May.

Sterling was therefore up 0.57% to 1.262 versus the US dollar and increased 0.42% to 1.126 against the euro.

In the US, the Dow Jones lifted slightly, but reflected the cautious behaviour of traders awaiting rate changes.

David Madden, Market Analyst at CMC Markets UK, said: “Equity markets in Europe are mixed as traders look forward to the Federal Reserve meeting.

“Rates are expected to remain on hold. Judging by the drive lower in US government bond yields recently, traders are anticipating dovish language from the Fed.”

The European markets remained steady as the German Dax dipped by 0.19% and the French Cac jumped by 0.16%.

In stocks, investors in the big banks were buoyed despite warnings from Clydesdale and Yorkshire Bank owner CYBG over further job cuts.

CYBG said it could make more cuts as it announced plans to increase its annual savings by another £50 million to £200 million by 2022, following its acquisition of Virgin Money.

Shares in CYBG closed up 11.5p at 196.9p.

Fellow bank Lloyds saw shares rise on the day its executives faced questioning from MPs over chief executive Antonio Horta-Osorio’s controversial pension perks and pay deal.

Lloyd’s Banking Group closed the day up 1.1p at 59.2p.

Elsewhere, Premier Inn owner Whitbread saw shares lift slightly despite posting a sharp drop in UK sales as Brexit uncertainty continues to take its toll on business travel.

Shares in the hotel business – which reported a 4.6% decline in like-for-like UK accommodation sales in the first quarter – rose by 26p to 4,625p.

Over-50s holiday favourite Saga saw shares dive after it said cash taken from bookings has fallen 4% for the full year on the back of Brexit-related political uncertainty.

Saga added that profits from its travel division will also be affected due to high levels of discounting in the sector.

Shares in the insurance firm dropped by 4.5p to 33.1p, at the close of trading.

The price of oil continued its recent volatile spell, falling after the Energy Information Administration reported a decline in US oil stockpiles.

The price of a barrel of Brent crude oil dipped by 0.19% to 62.1 US dollars.

The biggest risers on the FTSE 100 were Royal Bank of Scotland, up 7.5p at 222.5p; DS Smith, up 8.9p at 354.1p; Melrose Industries, up 3.9p at 174.6p; and NMC Health, up 50p at 2,431p.

The biggest fallers on the FTSE 100 were Ocado, down 65p at 1,087p; Rio Tinto, down 228.5p at 4,649p; Just Eat, down 23.6p at 614.6p; and EasyJet, down 32.6p at 867.8p.

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