Friday market close: US rates doubts push stocks lower

Markets fell as investors were faced with more uncertainty after the US Federal Reserve decided to leave interest rates on hold at close to zero.

Federal Reserve chair Janet Yellen

The blue-chip FTSE 100 Index dropped 82.88 points to 6,104.11 as traders were left in limbo after the much-anticipated announcement, which offered little clue as to when a hike will eventually come.

Trustnet Direct market analyst Tony Cross said: “Those hoping that the Fed’s decision to push back the inevitable rate hike news would give equity markets a degree of support have been left disappointed. The question now is whether we’ll see any tangible improvement in the news next week.”

In London, banks were among the main fallers, as their profit margins would have been boosted in a higher interest rate environment. Barclays dropped 2.8 per cent or 7.2p to 253.25p, while Royal Bank of Scotland ended the session 7.1p or 2.2 per cent lower at 318.9p and fellow bailed-out firm Lloyds Banking Group was off 1.59p at 72.71p.

In corporate news, discount retailer Poundland added 3.3p to close at 321.3p after its £55 million takeover of rival 99p Stores looks set to complete by the end of the month following final clearance by the Competition & Markets Authority

A drop in the US dollar spurred a rise in the price of gold, helping miner Randgold top the Footsie risers’ board with a gain of 134p or 3.6 per cent to 3,863p. Fresnillo was not far behind, climbing 20p to 610p, an increase of 3.4 per cent.

But the heaviest top-flight faller was mining and commodities giant Glencore, which dropped 6.15p or 4.7 per cent to end the day at 126p.

Irn-Bru maker AG Barr edged up 4.5p to 566.5p ahead of next week’s results, which are expected to show a fall in first-half profits due to poor weather.