The FTSE 100 was looking pretty sickly on Thursday morning as it awaited an interest rate hike from the Bank of England.
AJ Bell head of financial analysis Danni Hewson said: “For markets the cure of higher interest rates could be worse than the disease of high inflation amid speculation a 50-basis point rise could be in the offing. Hawkish rhetoric from the US Federal Reserve is also doing little for sentiment.
“Inflation is proving more stubborn than expected in the UK and the brains trust in Threadneedle Street seem to have little answer other than employing the blunt instrument of rate hikes to try and bring things under control.
“The pain felt by mortgage holders may not be enough on its own, given older people who own their homes outright are relatively immune from higher borrowing costs and may even be benefiting from an increased return on their savings. Messaging from the Monetary Policy Committee will be closely scrutinised – will the Bank look to dampen expectations for rates to reach 6%?
“Bid chatter helped lift web-based food delivery firm Ocado. The shares have been about as flat as an open bottle of lemonade since the pandemic but third parties, including reportedly Amazon, may still see value in the brand, technology and infrastructure.
“Ocado’s hopes of becoming an online groceries partner to businesses across the globe has only had limited success and shareholders may be open to a bidder putting them out of their misery.
“Packaging firms tend to closely follow GDP and so the lower volumes reported by DS Smith were no great surprise, however the company was able to compensate by increasing prices. How long it is able to do so is an open question.”
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