US rate hawks take down FTSE 100

US interest rates were raised for a second time this year overnight, and we're now told to expect four hikes in 2018. This more hawkish sentiment is not enough in itself to derail global equity markets, but US policymakers are divided over how aggressive the Federal Reserve must be this rate tightening cycle. 

As Fed chairman Jerome Powell acknowledges, the risk remains that officials overcook it and bring an end to the Trump trade once and for all. Achieving the ‘not too fast, not too slow' Goldilocks approach to monetary policy will be key to extending the equities bull run.

Despite a short-term blip, Wall Street loves President Trump's pro-business agenda and aggressive foreign policy, and there's a clear reluctance to bet against an economy growing at a fair lick and boasting a record-low jobless rate. 

This could backfire on Trump, however, if his unconventional approach triggers a sharper than expected increase in inflation. The threat of damaging trade wars with China and others is very real, and the perceived threat to financial markets is still able to make buyers think twice.

It's the European Central Bank's turn to outline their policy plans Thursday lunchtime. Expect further detail on stimulus withdrawal and whether the ECB will begin unwinding QE in September. 

It's not a forgone conclusion, but consensus is that the eurozone's shift toward economic normalisation will begin sooner rather than later.

Stuck in a reasonably tight 180-point range for the past three weeks, the FTSE 100 has failed four times to make a break above 7,770 stick. Fear around US rate hike aggression has caused a retest of technical support over 100 points lower. 

Source: interactive investor      Past performance is not a guide to future performance

Not even the prospect of the opening game of this year's World Cup in Russia later today is able to put life back into this exhausted bull market. 

Rolls-Royce Holdings' decision to flag a 'fundamental restructuring' certainly cranks up the interest in tomorrow’s scheduled presentation to analysts and institutional investors. 

Rolls is always tinkering with what is a hugely complicated business, but results have been mixed, and this lumbering beast has become increasingly difficult to manage effectively and efficiently. 

There's execution risk here, but the company has no choice and the rough plan appears sensible. Greater autonomy for businesses within the group is crucial for Rolls if it is to do more than just survive across hugely competitive industries.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.