MARKET REPORT: Looming rate rises pose a threat to market rally

Global equity markets had a slow start to the week amid investor concerns about impending interest rate hikes.

With the outlook for the global economy in its sights, the FTSE 100 index rose 0.3 percent, or 19.72 points, to 7784.87 and the FTSE 250 fell 0.5 percent, or 98.19 points, to 19937.2.

Major European benchmarks also struggled with Germany’s Dax falling 0.2 percent and France’s CAC index also falling 0.2 percent.

On Wall Street, meanwhile, the Dow Jones Industrial Average was down 0.2 percent, the S&P 500 was down 0.8 percent and the Nasdaq was down 1.3 percent.

Traders will be watching closely as central banks around the world implement rate hikes this week.

The US Federal Reserve is expected to announce a smaller rate hike of 0.25 percentage point on Wednesday after already pushing through a series of 0.5 percentage point and 0.75 percentage point hikes.

Meanwhile, the European Central Bank (ECB) and the Bank of England are likely to usher in increases of 0.5 percentage point on Thursday.

This would bring interest rates in the UK to 4%, which would help those with savings but also create more anxiety among mortgage borrowers.

With central banks still raising rates in their fight to curb skyrocketing inflation, analysts suggested the rally in global stock markets so far this year could come to a quick halt.

Eric Robertsen, global head of research and chief strategist at Standard Chartered, said: “Expectations for a Goldilocks scenario are too hopeful.”

Stock watch – Impellam

Impellam, the recruitment firm that helps professionals such as doctors, lawyers and teachers find work has agreed to sell two of its businesses for £85 million.

The company sells its regional specialist staffing and healthcare activities to investment fund Twenty20 Capital.

Impellam plans to reward investors with a special dividend of 77.7 pence per share – or £35 million – after the divestments.

Shares rose 7.1 percent, or 47.5 pence, to 720 pence yesterday.

A Goldilocks economy is one that is neither too hot nor too cold and grows steadily without fueling inflation.

Back in London, Shell’s new boss wasted no time in making his mark on the oil giant.

Wael Sawan, who took over from Ben van Beurden earlier this month, cleared the merger of Shell’s oil and gas production and liquefied national gas (LNG) divisions. The company will also combine its renewable energy and oil refining and marketing activities.

The changes will reduce the size of the oil giant’s executive committee from nine to seven members. Shares gained 0.2 percent, or 4.5p, to 2375p.

Homebuilders, meanwhile, traded lower after the government gave developers a six-week deadline to sign “legally binding contracts” and commit to paying to repair unsafe buildings.

The contract will see developers commit at least £2bn towards repairs to buildings developed or refurbished over the past 30 years.

Those who fail to sign and comply with contract terms will face “significant consequences,” the government added. The industry-wide sell-off hit Crest Nicholson the hardest, which fell 2.9 percent, or 7 pence, to 237.8 pence.

Rivals Taylor Wimpey fell 1.8 percent, or 2.1p, to 116.7p and Barratt Developments fell 1.8 percent, or 8.5p, to 457.4p.

Computacenter rose the highest in the second tier after a record fourth quarter. The positive result was due to the ‘extremely good’ sales of the technology purchasing activities.

Sales for 2022 were 30 percent higher than the previous 12 months. Shares rose 11.4 percent, or 226p, to 2218p.

Shares of Darktrace fell to a record low after asset manager Quintessential disclosed a short position in the cybersecurity company. Shares fell 12.6 percent, or 31.8 pence, to 220 pence.

Investors in On The Beach made their feelings known on Friday with a revolt at the package tour group’s annual general meeting. More than one in five votes cast was against the remuneration policy.

Shares fell 1.8 percent, or 3.2 pence, to 178.4 pence.