LONDON: The main UK stock indexes suffered sharp falls on Tuesday after hotter-than-expected US inflation numbers and domestic wages data prompted investors to scale back expectations of early interest rate cuts this year.
The blue-chip FTSE 100 closed down 0.8%, its biggest one-day selloff in almost a month.
Britain’s rate-sensitive homebuilders tumbled 4.0% and REITs fell 2.4%, leading losses among the FTSE 350 subsectors.
US and European government bond yields surged after a report showed consumer inflation stayed elevated last month, smashing market expectations of imminent interest rate cuts by the Federal Reserve.
Data earlier showed British wage growth slowed by less than forecast in the three months to the end of 2023, pushing investors to price in the first quarter-point rate cut from the Bank of England no sooner than June.
All eyes will be on the UK inflation numbers on Wednesday.
“The range of outcomes is wider than usual due to weight changes but tomorrow’s number could end the recent run of downside surprises at say 4.1% versus 4%, mainly due to base effects,” said Kevin Boscher, chief investment officer at Ravenscroft.
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