A downbeat investor mood swept across UK stock markets on Tuesday ahead of policymakers meeting in the US and following a gloomy inflation outlook from the Bank of England’s governor.
London’s FTSE 100 languished with gambling giants Entain and Flutter Entertainment among the day’s biggest fallers.
The blue-chip index moved 14.37 points lower or 0.19%, to close at 7,481.99.
Minutes from the US Federal Reserve’s conference are due to be released this evening and investors will be watching for further evidence that higher interest rates are working and inflation is on its way down for the world’s largest economy.
It comes after a series of remarks from Bank of England governor Andrew Bailey over the UK inflation threat.
On Monday evening, he declared it “much too early” to say inflation has been beaten, and too early to start talking about cutting rates.
And on Tuesday, Mr Bailey warned that financial markets may be “underestimating” the persistence of inflation as the Bank continues in its mission to return it to 2%.
David Morrison, senior market analyst for Trade Nation, said: “Central bankers everywhere seem anxious to dial back expectations that the next move in interest rates will be down.
“While (the Monetary Policy Committee’s) forecasts for year-end inflation look like being a tad better than expected, they insist that there’s still work to be done and further tightening can’t be ruled out, as inflation risk remains to the upside.”
Elsewhere in Europe, Germany’s Dax slipped by just 0.01% while France’s Cac dipped by 0.26%.
Over in the US, trading got off on the back foot with the S&P 500 down by 0.3% and Dow Jones down by 0.25% by the time European markets closed.
The pound continued its ascent, moving up by 0.3% against the US dollar to 1.2537, and rising by about 0.5% against the euro to 1.1474.
In company news, shares in Capita were given a boost after the outsourcing giant revealed it was initiating a big cost-cutting drive, including by shedding up to 900 jobs.
The company said the plans would make about £60 million worth of yearly savings from the first quarter of 2024. It will shortly launch consultations with employees to begin the rounds of redundancies.
The bad news for workers became good news for cost-conscious shareholders and its share price moved 7.3% higher at close.
Elsewhere, shares in AO World dipped despite the online electricals retailer hiking its full-year earnings as its own cost-cutting actions bore fruit.
The firm revealed it returned to profit in the first half of the financial year, after taking action to ditch unprofitable products which it said impacted sales figures for the period.
The biggest risers on the FTSE 100 were Coca-Cola HBC, up 87p to 2,176p, JD Sports Fashion, up 5.5p to 144.6p, Admiral Group, up 70p to 2,692p, National Grid, up 17p to 1,037p, and Reckitt Benckiser Group, up 78p to 5,406p.
The biggest fallers on the FTSE 100 were IAG Group, 8.15p to 155.45p, Ocado Group, down 28.8p to 567p, Entain, down 27.6p to 831.6p, Segro, down 21.8p to 809.4p, and Land Securities Group, down 16p to 639.8p.