FTSE 100 pressured while Dollar softens ahead of the Fed

The FTSE 100 has been hit by a darkening outlook for the UK economy thanks to the possible return of inflation, while the dollar is lower against a host of its peers ahead of the Fed decision, says Chris Beauchamp, Chief Market Analyst at online trading platform IG.

Wall Street steady, but FTSE 100 fails to rally

Stock markets in the US have made some small gains this afternoon as the positive reaction to Trump’s victory persisted into a second day. Meanwhile it was turnaround Thursday for the Dax, which shrugged off yesterday’s tariff-related panic and the political developments in Germany to enjoy a healthy surge. The long-suffering FTSE 100 enjoyed no such bounce, weighed down by the surge in sterling and a gloomy reaction in a number of consumer-focused stocks. Investors are fretting that the UK’s cloudy outlook is returning, and that inflation will make a return early next year.

Dollar falls back ahead of Fed decision

In FX markets the dollar unwound some of its reaction to the Trump win, the greenback shedding ground across the board. The BoE decision, sandwiched between the election and the Fed decision, was only a minor factor in sterling’s strength versus its US cousin. Instead, and for weeks to come, it will be about the dollar and the potential impact of the new administration’s policies.