FTSE 100 watch: Fed rate hike fears fuel selloff

The FTSE 100 has fallen deep into the red alongside other European indices, amid concerns that the Fed might raise interest rates at its upcoming policy meeting next week, and following the European Central Bank’s (ECB) decision last week to keep its rates and asset purchases unchanged.

Meanwhile, the pound struggled to make gains, trading 0.12% lower at 1.325 against the USA dollar, and 0.19% at 1.18 against the euro. In individual movers, Associated British Foods (LON:ABF) has slipped to the bottom of the FTSE 100 leaderboard after posting its pre-closing update this morning.

It follows comments on Friday from Boston Fed president Eric Rosengren, who said a “reasonable case can be made for continuing to pursue a gradual normalization of monetary policy”.

“With little on the economic agenda, a severe bout of panic has struck the global markets, causing the kind of declines not seen since the Brexit”, Connor Campbell, a financial analyst at SpreadEx, said.

Political risk also took its toll on global stocks after it was announced that Democratic presidential nominee Mrs Clinton has been diagnosed with pneumonia just weeks ahead of the U.S. election. The pound was up by around 0.35% at 1.332 against the USA dollar, and higher by 0.29% at 1.186 against the euro.

Stocks dropped globally on Sunday after Mrs Clinton was seen stumbling as she left a 9/11 memorial ceremony in NY.

(Open): The UK market opened sharply lower, echoing a slide in Asian stocks, amid fears the Federal Reserve could raise USA interest rates next week.

The pan-European Stoxx 600 Index was 1.80% lower, London’s FTSE 100 Index was down by 1.66%, Frankfurt’s DAX was 1.93% lower and Paris’ CAC-40 was down by 1.97%.

The company said like-for-like sales are expected to fall 2% this year.

ABF added that post-Brexit currency movements would have both positive and negative effects on the group.

Banking shares including Lloyds, RBS and Standard Chartered were among the worst performers on the FTSE 100.