UK midcaps closed lower on Friday after Watches of Switzerland shares tumbled as Rolex bought retailer Bucherer, while comments from U.S. Federal Reserve Chair Jerome Powell did little to offer clarity on how long interest rates will remain high.
The exporter-heavy FTSE 100 added 0.1%, while the domestically focused FTSE 250 index was down 0.4%. However, both indices registered weekly gains after at least four weeks.
Luxury watch retailer Watches of Switzerland plummeted 20.9%, weighing on the midcap index, on news that Rolex will buy Swiss-based retailer Bucherer’s business. The stock had its biggest one-day drop on record.
The personal goods index which includes Watches of Switzerland, slipped 3.0% to hit over one-month lows.
At the closely watched Jackson Hole, Wyoming, summit, Fed Chair Powell emphasized that the U.S. central bank may need to raise interest rates further to ensure inflation is contained, while most investors believe it is nearly done hiking rates.
UK stocks have been supported so far by expectations that the Bank of England (BoE) may not hike interest rates as aggressively as feared as recent data painted a gloomy picture of the British economy.
“The Fed and the BoE are both being pretty strict responding to the data, although inflation is much worse in the UK,” said Nick Gait, investment director at Tideway.
“The BoE rather have a little bit of negative growth instead of inflation taking off again”
Shares of CMC Markets tumbled 9.7% after the online trading platform forecast lower annual profit.
Among gainers, automobiles and parts index was up by 2.3%, leading sectoral gains as Aston Martin rose 5.4% after brokerage Jefferies upgraded the stock to “buy” from “hold”.
The focus now shifts to BoE Deputy Governor Ben Broadbent, who is set to speak at the Jackson Hole symposium on Saturday.
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