(Sharecast News) - London stocks fell in early trade on Thursday following heavy losses in the US, where bond yields jumped after the Federal Reserve kept rates unchanged as expected but delivered a hawkish outlook.
At 0830 BST, the FTSE 100 was 0.7% weaker at 10,438.31, while Brent crude was down 2.2% at $77.72 a barrel and West Texas Intermediate was 2.6% lower at $74.79, retreating after Donald Trump and Iranian President Masoud Pezeshkian digitally signed a 14-point memorandum of understanding.
The US president signed the MOU before a dinner in Versailles, France, with French President Emmanuel Macron and others. Trump said the deal averts a "worldwide depression". The MOU extends the ceasefire between the US and Iran for a minimum of 60 days, allowing a final deal to be negotiated.
"The digital signing of the interim agreement between the US and Iran, ahead of an official ceremony on Friday, is exerting a fresh downward force on prices, as new supplies are expected to hit the market just as demand has been weakened by rationing and energy-efficiency measures," said Susannah Streeter, chief investment strategist at Wealth Club.
Away from the Iran war, investors were mulling the latest policy announcement from the Fed on Wednesday. Although the federal funds rate was left unchanged, as expected, interest rate forecasts were revised upwards for the next three years. The dot plot graph showed that nine of the Fed's 18 policymakers expect at least one rate hike before the end of 2026, although new chair Warsh abstained from submitting a projection. Back in March, no Fed participants expected a hike.
In the press conference following the decision, Warsh said policymakers were still "unambiguously and unanimously" committed to bringing inflation back to the Fed's 2% target. However, he added that "the Committee will deliver price stability", which markets took to mean the Fed is prepared to hike rates if necessary.
On home shores and ahead of the latest policy announcement from the Bank of England later in the day, figures from the Office for National Statistics showed the unemployment rate unexpectedly eased in April.
The rate was estimated to be 4.9% in the three months to April, up 0.3 percentage points on the year but down 0.3 percentage points on the last quarter. The market had been expecting no change.
Average earnings, meanwhile, ticked higher, rising 4.4% or 3.4% once bonuses were stripped out. Regular earnings increased 5.1% in the public sector, but by a more modest 2.9% in the private sector, the lowest rate in five and a half years.
A number of measures did point to some softening in the labour market, however. Payroll numbers continued to fall, by 0.5% year-on-year, with new recruits at their lowest level in five years. The claimant count for May was also higher, at 1.7m.
But Liz McKeown, director of economic statistics at the ONS, said: "The labour market remained broadly stable in the latest quarter.
"Overall employment was little changed, with some signs of workers moving into self-employment."
The BoE is widely expected to leave rates on hold at 3.75% when it announces its decision at midday.
In equity markets, Informa shot to the top of the FTSE 100 as it backed full-year guidance and posted a 6.4% rise in underlying revenue for the five months to the end of May, with continuing strength in both Academic Markets and B2B Live Events.
Premier Inn owner Whitbread was also up as it reaffirmed its full-year outlook and said forward bookings in the UK remain ahead of last year, supported by peak leisure bookings.
FirstGroup rose even as it posted a dip in full-year profit, while Tesco fell as it held annual guidance and reported a rise in like-for-like sales in the first quarter.
Persimmon, Land Securities and British Land all fell as they traded without entitlement to the dividend.
Market Movers
FTSE 100 (UKX) 10,438.31 -0.67%
FTSE 250 (MCX) 23,303.93 -0.26%
techMARK (TASX) 5,890.77 -0.07%
FTSE 100 - Risers
Informa (INF) 860.00p 2.79%
Whitbread (WTB) 2,425.00p 2.05%
Melrose Industries (MRO) 481.50p 1.81%
St James's Place (STJ) 1,176.50p 1.46%
Standard Life (SDLF) 802.50p 0.88%
International Consolidated Airlines Group SA (CDI) (IAG) 454.50p 0.62%
Lion Finance Group (BGEO) 11,440.00p 0.62%
M&G (MNG) 327.50p 0.61%
Pershing Square Holdings Ltd NPV (PSH) 3,960.00p 0.41%
IMI (IMI) 2,990.00p 0.40%
FTSE 100 - Fallers
Persimmon (PSN) 1,055.00p -4.80%
Land Securities Group (LAND) 627.00p -4.05%
British Land Company (BLND) 399.80p -3.75%
3i Group (III) 2,212.00p -3.52%
Tesco (TSCO) 442.00p -3.42%
Fresnillo (FRES) 3,200.00p -2.81%
Flutter Entertainment (DI) (FLTR) 7,784.00p -2.60%
London Stock Exchange Group (LSEG) 8,666.00p -2.54%
Mondi (MNDI) 707.60p -2.33%
Rentokil Initial (RTO) 430.90p -2.31%
FTSE 250 - Risers
FirstGroup (FGP) 184.50p 6.77%
Zigup (ZIG) 489.50p 4.93%
Oxford Instruments (OXIG) 3,022.00p 4.20%
Man Group (EMG) 304.40p 3.11%
SSP Group (SSPG) 185.30p 3.02%
Hilton Food Group (HFG) 529.50p 2.82%
Johnson Service Group (JSG) 160.50p 2.43%
Clarkson (CKN) 4,554.00p 2.38%
Chrysalis Investments Limited NPV (CHRY) 81.80p 2.00%
Wizz Air Holdings (WIZZ) 1,177.00p 1.82%
FTSE 250 - Fallers
RTW Biotech Opportunities Ltd (RTW) 2.14p -3.60%
Hochschild Mining (HOC) 595.50p -3.40%
Fidelity China Special Situations (FCSS) 262.00p -3.32%
Pan African Resources (PAF) 114.10p -3.30%
AEP Plantations (AEP) 1,566.00p -2.97%
GB Group (GBG) 200.50p -2.91%
Trustpilot Group (TRST) 245.00p -2.62%
Tate & Lyle (TATE) 555.00p -2.55%
Aston Martin Lagonda Global Holdings (AML) 40.50p -2.50%
WPP (WPP) 276.90p -2.46%
117.93 (1.12%)
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