London close: Stocks lower on peace talk concerns, Fed uncertainty

(Sharecast News) - London's blue chips bounced off their lows but still finished down on Wednesday amid concerns about the fragility of US-Iran peace talks and fears about a rate hike by the Federal Reserve.

The FTSE 100 ended the session down 0.18% at 10,478.34, marking its third decline in four days.

"Stocks across Europe and the US took a step back as investors continued to fret about the prospect of the Fed pushing up interest rates," said Dan Coatsworth, head of markets at AJ Bell.

Comments from Fed chair Kevin Warsh were in focus on Wednesday as he refused to offer guidance regarding the future path of US interest rates. Asked whether interest rates would rise given increasing inflation risks, the policymaker said: "I'm not going to make a judgment now."

"Markets are currently pricing in a 29.4% chance of a US interest rate hike at this month's Fed meeting, down from a 34.2% probability a week ago. Theoretically, that should be positive for equities, yet what's troubling investors is the prospect of a rate hike at the end of the year," Coatsworth said.

Meanwhile, stalled diplomatic progress between the US and Iran weighed on sentiment, as a fresh deadlock in Doha-mediated peace talks revived fears of renewed volatility over control of the Strait of Hormuz.

US special envoy Steve Witkoff and Jared Kushner, president Donald Trump's son-in-law, arrived in Doha to discuss the negotiations with Qatari mediators, although they were not expected to meet Iranian officials, according to Qatar's foreign ministry.

The talks followed another exchange of fire over the disputed waterway, despite a memorandum of understanding intended to pave the way for meaningful peace negotiations.

AB Foods slumps

Associated British Foods fell as it said that Primark's third-quarter like-for-like sales fell 2.2% as the Iran war and unseasonal UK spring weather hit consumer sentiment. The diversified group held annual guidance despite an expected �25m-60m loss at its sugar business.

Ladbrokes owner Entain slumped again following reports a day earlier that all-night slot machine shops and casinos could face a �460m tax rise if Andy Burnham acts on his concerns about the gambling industry as prime minister.

JD Sports was also in the red as US sportswear brand Nike fell after its latest earnings.

Housebuilder Barratt Redrow lost ground after industry data showed that house prices were flat in June on the back of cautious consumer sentiment.

On the upside, Babcock racked up strong gains again after the British government announced a �15bn hike in defence spending on Tuesday. BAE Systems also rose.

On the FTSE 250, CMC Markets surged over 40% after lifting its full-year guidance for net operating income as it hailed continued strong momentum, driven by "exponential and exceptional" growth in its B2B business.

Market Movers

FTSE 100 (UKX) 10,478.34 -0.18%

FTSE 250 (MCX) 23,330.07 1.38%

techMARK (TASX) 5,908.38 0.66%

FTSE 100 - Risers

Flutter Entertainment (DI) (FLTR) 8,012.00p 5.89%

Babcock International Group (BAB) 1,001.00p 5.17%

Coca-Cola Europacific Partners (DI) (CCEP) 7,935.00p 4.68%

Abrdn (ABDN) 248.60p 4.37%

The Sage Group (SGE) 846.60p 3.75%

Prudential (PRU) 1,040.00p 3.69%

Sainsbury (J) (SBRY) 330.60p 3.54%

Pearson (PSON) 1,236.00p 3.34%

Computacenter (CCC) 4,414.00p 3.28%

Rentokil Initial (RTO) 438.00p 2.62%

FTSE 100 - Fallers

National Grid (NG.) 1,211.00p -3.31%

Associated British Foods (ABF) 1,923.50p -3.15%

British American Tobacco (BATS) 4,536.00p -3.01%

Diageo (DGE) 1,483.50p -2.69%

Entain (ENT) 551.80p -2.58%

BP (BP.) 455.60p -2.46%

GSK (GSK) 1,930.00p -2.38%

AstraZeneca (AZN) 13,854.00p -2.13%

Shell (SHEL) 2,872.50p -2.06%

SSE (SSE) 2,386.00p -2.05%

FTSE 250 - Risers

CMC Markets (CMCX) 650.00p 41.92%

GB Group (GBG) 212.00p 7.40%

Trustpilot Group (TRST) 278.40p 7.24%

Baltic Classifieds Group (BCG) 200.60p 6.65%

Shawbrook Group (SHAW) 347.00p 6.61%

QinetiQ Group (QQ.) 446.20p 6.14%

Kainos Group (KNOS) 819.00p 6.09%

Bytes Technology Group (BYIT) 400.80p 6.03%

THG (THG) 31.80p 5.72%

Hays (HAS) 32.92p 5.58%

FTSE 250 - Fallers

BlackRock Smaller Companies Trust (BRSC) 264.50p -95.99%

Rank Group (RNK) 93.70p -4.09%

Greggs (GRG) 1,552.00p -3.00%

Ithaca Energy (ITH) 213.20p -1.93%

Henderson Far East Income Ltd. (HFEL) 262.00p -1.69%

Telecom Plus (TEP) 735.00p -1.47%

Renishaw (RSW) 5,065.00p -1.46%

Howden Joinery Group (HWDN) 826.00p -1.37%

Pantheon Infrastructure (PINT) 115.80p -1.36%

Harbour Energy (HBR) 212.20p -1.30%