FTSE 100 and European markets off to a weak start after Wall Street fall

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FTSE 100 opened lower as investors brace for an interest rate hike on Thursday. Photo: Dylan Martinez/Reuters

The FTSE 100 and European stock markets were off to a weak start on Wednesday, following falls in the US overnight.

The FTSE 100 (^FTSE) fell 0.29% to 7,390 at the open, while the CAC (^FCHI) in Paris was muted. In Germany, the DAX (^GDAXI) lost 0.34%.

The London bluechip index started the day on the back foot as investors remain cautious over interest rate rises ahead of tomorrow’s Bank of England (BoE) meeting. The BoE is broadly expected to hike interest rates by 50 basis points on Thursday, its largest single increase since 1995.

Read more: How Bank of England’s interest rate rise will affect mortgages and house prices

Shares in cybersecurity firm Avast (AVST.L) jumped 42% after the competition watchdog provisionally cleared its £6bn ($7.3bn) takeover by rival NortonLifeLock.

Housebuilder Taylor Wimpey (TW.L) gained 3.5% after raising profit guidance to the top end of expectations amid “strong” housing demand even as interest rates rise.

“The company has reported pre-tax profit which is comfortably ahead of expectations, and up by 16.3% on the previous year.” Richard Hunter, head of markets at Interactive Investor, said.

“Group completions are ahead of guidance, the average selling price on those completions is ahead by 3.1% and the value of the order book has increased from £2.6bn to £2.8bn.”

Meanwhile, oil prices appear to have stabilised, with Brent crude (BZ=F) hovering around the $100 a barrel mark ahead of an OPEC+ meeting.

OPEC+ oil producing countries are not expected to increase levels of crude supply when they hold a meeting by video call this Wednesday.

“It seems unlikely OPEC+ will do anything when it meets today. If it did decide to increase output in any form, this could come as quite a surprise and lead to Brent crude testing levels further under $100 a barrel,” Callum Macpherson, Investec’s head of commodities, said.

S&P 500 futures (ES=F) and Dow futures (YM=F) were in the green as trade began in Europe, while Nasdaq futures (NQ=F) were in the red.

In Asia, Tokyo’s Nikkei 225 (^N225) advanced 0.53% to 27,741 and the Hang Seng (^HSI) climbed 0.18% to 19,723 in Hong Kong, with sentiment across the continent boosted by US house speaker Nancy Pelosi’s safe arrival in Taiwan, despite threats of action from China. The Shanghai Composite (000001.SS) was the exception, falling 0.71% to close at 3,163.

Read more: UK on brink of recession, warns think tank

“I couldn’t resist engaging in the bizarre spectacle of tracking and then watching a US politician’s plane land yesterday afternoon US time. It seems like the entire market was also watching if you look at the reaction,” Deutsche Bank strategist Jim Reid, said.

“Yields sold off and US equities moved back into positive territory as US house leader Pelosi’s plane landed in Taiwan without incident at 3:43pm BST yesterday. The last time I watched a plane tracker was when Liverpool tried to sign a player on transfer deadline day,” he added.

On Wall Street, the Dow Jones (^DJI) lost 1.23% to close at 32,396 on Tuesday. The S&P 500 (^GSPC) was also in the red, retreating 0.67% to 4,091 and the tech-heavy Nasdaq (^IXIC) lost 0.16 % to finish at 12,348.

Investors were unnerved by some Federal Reserve policymakers signalling that further aggressive interest rate hikes may still be necessary to tackle high inflation.

Watch: How does inflation affect interest rates?