U.K. stocks headed lower for a second straight session on Friday, with investors spooked by growing signs that global central banks are inching closer to unwinding their ultraloose monetary policies that have supported stock markets in recent years.
The FTSE 100 index UKX, -0.10% fell 0.2% to 7,325.14, building on a 0.4% loss from Thursday. The benchmark was moving toward a rise of 0.1% for the week, the first week of trade in the second half of 2017.
Friday’s weakness “follows another bond market selloff [on Thursday] that again proved contagious for equities, investors digesting hawkish ECB minutes and prepping for further withdrawal of global easy money policy; tapering of ECB QE, unwind of Fed’s balance sheet. Maybe even a U.K. rate hike,” Mike van Dulken, head of research at Accendo Markets, in a note.
The Bank of England hasn’t raised interest rates in 10 years, but recent comments from policy makers have fueled chatter that a hike is coming sooner rather than later.
Additionally, comments from ECB President Mario Draghi last week and hawkish minutes from the ECB’s June meeting, published on Thursday, have added to concerns the central bank may consider ending its aggressive bond-buying program soon. In the U.S., the Federal Reserve has already raised rates twice this year and focus is now on when it’ll start shrinking its massive balance sheet.
Later on Friday, attention turns to the closely watched U.S. nonfarm payrolls, which could also weaken or strengthen the case for the Fed to tighten policy. The data are slated for release at 1:30 a.m. London time, or 8:30 a.m. Eastern Time.
Stock movers: On the FTSE 250 index MCX, -0.27% , shares of Aveva Group PLC AVV, +0.71% gained 2.4% after the engineering softmaker company said it made a solid start to fiscal 2018 and that its full-year outlook remains in line with expectations.