FTSE 100 index falls as Fed signals interest rate hike

Britains FTSE 100 index opened lower and fell further on Thursday, tracking a drop in global equities overnight, after the Federal Reserve suggested its unprecedented bond-buying program will be brought to an end by the end of 2014 and a following interest rate hike will come earlier than expected.

The UK blue chip index stood at 6 525.60 points at 9:28 GMT, down 0.72% on the day, having shifted in a daily range between 6 551.60 and 6 523.30. The index fell by 32.15 points, or 0.49%, on Wednesday to close at 6 573.13 as gambling companies and insurers were affected by measures, unveiled in Britains budget, which threatened their profits. This was the first decline in three days.

The UK stock market opened lower on Thursday as FOMCs meeting concluded after its Wednesday close. Global equities fell overnight as policy makers remained on track with Fed’s previous decisions to reduce the central bank’s unprecedented Quantitative Easing program at each successive FOMC meeting and trimmed the bond-buying program to $55 billion per month. The monetary easing program is expected to be brought to an end this fall.

Moreover, Federal Reserve Chair Janet Yellen, who presided her first FOMC meeting, said at a following conference that the first increase in borrowing costs should come “around six months or that type of thing” after the end of the stimulus program. Yellens comments for a possible earlier-than-projected interest rate hike in as early as the second quarter of 2015 caught the markets off-guard.

Policy makers also scrapped the unemployment-rate threshold for considering when to raise interest rates and said it will look for a wider range of data.

Market players are now eyeing the upcoming employment and housing data from the US due later today, as well as the Philadelphia Fed Manufacturing Index, in order to further asses how fare the US economy fared.

Top winners, losers

The FTSE 100s top three gainers today were SSE, Next and RBS.

Scottish & Southern Energy Plc (SSE) rose by 35.50 pence (2.47%) to 1 473.50 pence by 9:09 GMT. Royal Bank of Scotland Group PLC (RBS) added 4.60 pence (1.53%) to trade at 306.10 pence, while Next Plc surged 100.00 pence (1.52) to 6 680.00 pence.

Next PLC, Britains second-largest clothing retailer, met guidance with an 11.8% growth in annual profit due to expansion in its Directory internet and catalogue business.

The FTSE 100s top three losers today were Resolution LTD, Hargreaves Lansdown Plc and Persimmon.

Resolution LTD fell by 14.65 pence (4.37%) to 320.00 pence by 9:22 GMT. Hargreaves Lansdown Plc slid 41.50 pence (2.76%) to 1 462.50 pence, while Persimmon was down 32.50 pence (2.36%) and traded at 1 344.50 pence.

The U.K.s biggest drug maker Glaxosmithkline shared a disappointment with some of the results of a stage III trial for a lung cancer treatment, but would continue with the development, as it would still benefit some patients. The company fell by 32.50 pence (1.96%) to 1 622.50 pence by 9:26 GMT.