London Stocks Decline as Fed Rate Cut Bets Adjust; Anglo American Falls on BHP Withdrawal

The FTSE 100 index closed 0.9% lower, marking its longest losing streak since August 2023.

London’s blue-chip stocks fell for the sixth consecutive session on Wednesday as traders adjusted their expectations for Federal Reserve interest rate cuts.

Anglo American shares declined by 3.0% after Australian resources giant BHP Group abandoned its $49 billion takeover attempt.

Earlier in the day, Anglo rejected BHP’s last-minute request for more time to discuss the offer, deeming it too complex.

The FTSE 100 index closed 0.9% lower, marking its longest losing streak since August 2023.

The mid-cap FTSE 250 also ended 1.3% lower, experiencing its worst day in over a month. U.S. Treasury yields increased after data showed a significant improvement in U.S. consumer confidence for May, leading investors to reduce their bets on a September rate cut.

“The rise in yields reflects sticky inflation concerns and higher interest rate expectations after stronger-than-expected U.S. consumer confidence data yesterday and hawkish commentary from Federal Reserve officials,” said Fiona Cincotta, senior market analyst at City Index.

In the UK, the two-year gilt yield reached its highest level since February 2023 at 4.57%, while the benchmark 10-year gilt yield rose to 4.37%, marking their fifth session of gains.

Market declines were led by the automobile and parts sector, which dropped 3.5%, partially offsetting gains from the previous session.

Precious and industrial metal miners lost 2.2% and 1.9% respectively, following a decline in gold and copper prices.

However, energy shares rose by 0.6%, extending their winning streak to a fourth session in line with rising oil prices.

Later this week, markets will focus on the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) price index, and a speech by Bank of England Governor Andrew Bailey.

Among individual stocks, International Distributions Services jumped 4.3% after Royal Mail’s owner agreed to a £3.57 billion takeover offer by Czech billionaire Daniel Kretinsky.

Conversely, online grocer Ocado dropped 12.3% to the bottom of the FTSE 100 index as index provider LSEG indicated it could be moved to the mid-cap FTSE 250 from the blue-chip index.