TUESDAY MARKET CLOSE: Market jitters ahead of indy vote

The benchmark FTSE 100 Index fell for the second day this week as traders sat on their hands ahead of the Scottish referendum vote and this week’s meeting of US policymakers.

Yes and No supporters in Kilmarnock today. Picture: Getty

The top flight was 11.97 points lower at 6,792.24, while European markets were down by a similar level as attention turned to the Federal Reserve and the likely date of its first hike in interest rates.

With the Fed’s Wednesday meeting in mind, the pound briefly dipped below the $1.62 mark against the dollar, particularly as a further drop in UK consumer inflation to 1.5 per cent kept the need for an interest rate hike in Britain on the back burner. Sterling was down slightly against the euro, at €1.25.

On the 22nd anniversary of Black Wednesday, when the pound collapsed in value, currency markets have been dominated by the Scottish referendum.

IG market analyst David Madden said although many traders felt the No campaign would prevail they were content to play it safe and reduce their exposure to such stocks for now.

“Financial stocks have been hit hardest, and even though the polls are showing a ‘No’ vote, it is likely nobody wants to stick their neck out and buy banks and insurers ahead of the Scottish referendum on Thursday,” said Madden.

Dafydd Davies, partner at Charles Hanover Investments, said: “With the uncertainty around the Scottish election, we’re seeing a bit of a risk-off mentality, with investors prepared to sit on cash.”

Among London stocks, Sports Direct International was the biggest faller in the top flight – off 26p to 664p – but publisher Pearson was a strong riser, up 20p to 1,226p, after a ratings upgrade from Morgan Stanley.

Sentiment outside the top flight was also weak after a series of disappointing trading updates, including from online fashion chain Asos.

In the wake of two profit warnings earlier this year it said it did not expect a rebound in profitability in the year to August due to investment costs. Shares in the former stock market darling slumped by almost another 9 per cent or 215p to 2,207p.

Thomas Cook shares were 6 per cent lower after it reported a moderation in bookings in Germany as consumer confidence weakens in the face of the eurozone’s subdued outlook and geopolitical events.

Shore Capital said Thomas Cook’s latest update was disappointing but retained its buy rating as the wider turnaround strategy remains on track.

Thomas Cook shares fell 8p to 122p at the top of the FTSE 250 fallers’ board.