FTSE 100 closed 48 points or 0.7% down to 6,717.93
- Top of the losers is cruise operator Carnival, which has dropped 10.2% to £38.81 after issuing a flat outlook statement.
- Bank of England stood pat on rates amid growing Brexit uncertainty.
- Despite impressive retail sales, UK shares join wider market sell-off following the US Federal Reserve's semi dovish hike.
The FTSE 100 had fallen to its weakest level since August 2016 earlier in the day while the Bank of England left interest rates unchanged at 0.75%, as expected, with the decision unanimous. In line with the Fed's own domestic growth forecasts curtailing, the BoE also trimmed its forecast for the UK economy's quarterly economic growth for the last three months of 2018 to 0.2% from 0.3%. "The broader economic outlook will continue to depend significantly on the nature of EU withdrawal," the meeting minutes said. "The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction."
However, the broader market tone followed the FOMC on Wednesday and the US stock markets reaction. The FOMC's move was initially taken as somewhat hawkish given that there had been less of a reduction in the dots than what the markets had been positioned for and forecasting for some week's ahead of the event. Stocks declined to a 15-month low on prospects of lower growth and tighter money conditions - UK shares followed suit on the open with heavy losses.
Meanwhile, the data released earlier by the Office for National Statistics showed UK retail sales rose more than expected in November. Sales last month were up 1.4% from October, beating expectations for a 0.3% increase and compared to a 0.4% drop the month before. On the year, retail sales were 3.6% higher compared to a 2.4% rise in October and expectations for a 1.9% jump.
In corporate news, Carnival was the worst performer as it posted a rise in fourth-quarter income and hailed record full-year earnings, but warned that the first quarter of next year would take a hit from fuel prices.
Best and worst
Smurfit Kappa Group (SKG) 2,087.17p 3.63%, Severn Trent (SVT) 1,872.50p 2.88% and National Grid (NG.) 796.00p 2.39% were the top three. Carnival (CCL) 3,881.00p -10.74% Scottish Mortgage Inv Trust (SMT) 458.80p -3.94% and Antofagasta (ANTO) 757.00p -3.69% were the worst perfomers.
The index resumed the 6910 downtrend with bears in charge following a positive but bearish close in the prior session. The index is now making a home below the 50% retracement of 2016's uptrend at 6697 towards S2 located down at 6588. Daily RSI has room to go on the downside and the next key target can be the 61.8% fibo of 6414 and the 76.4% located at 6064. On the upside, an immeadiate target sits at the recent highs through R3 at 6900.
- Support levels: 6641 6588 6512
- Resistance levels: 6771 6846 6900