On Friday, there was a drop in UK stock indexes, which saw them record their biggest decline in a week since mid-June amidst mounting concerns about a cost of living crisis in the country.

Furthermore, the speech of the chairman of the US central bank, Jerome Powell highlighted that there would be further interest rate hikes in order to curb inflation.

Indexes fall

There was a 0.7% drop in the blue-chip FTSE 100 index that comprises companies operating globally. The exporter-heavy index was brought lower due to a decline in financial and industrial stocks.

There was also a 0.4% drop in the FTSE 250 index, which is domestically focused. There was a 4.4% drop in IHG, which brought the owner of Holiday Inn to the bottom of the FTSE 100 index.

It occurred after the stock was downgraded by JP Morgan from ‘overweight’ to ‘neutral’. On Friday, Powell said that they would continue a tight monetary policy for the US until inflation is controlled.

His remarks were accompanied by warnings of a slowdown in the economy and worsening conditions for the labor market.

He also added that people should not expect the US central bank to pull back from its tight monetary policy until they have inflation strictly under control.

The Fed impact

Market analysts said that the chairman of the US central bank had dashed all hopes of the market about the Fed pausing its aggressive hiking policy in terms of interest rates.

They said that the Fed had made it clear that they do not plan on resting until inflation is back to its target of 2% and this does not appear to be happening anytime soon.

There were weekly declines recorded in both the FTSE 250 and FTSE 100 indexes in Britain, with the former dropping 3.6% because of the impact on business activity due to rising prices.

Plus, the aggressive stance of the policymakers of central banks in terms of interest rates, despite a slowdown in the economy also took its toll.

According to regulator Ofgem, there will be an 80% increase in the energy bills in Britain from October, which would hit 3,549 pounds annually on average.

The regulator said that this was a crisis that needs to be handled by the government urgently and decisively.

Friday’s gainers

Micro Focus International Plc was one of the stocks that recorded gains on Friday, as it rose by 94.1%. This was after Canadian OpenText announced that it would acquire the enterprise software maker.

It disclosed a cash-only deal worth $6 billion, which also includes debts. One of the oil majors, Shell, also moved up, but there was a 0.4% dip in peer BP.

This was after sources disclosed that the timing of the launch of the company’s refinery in Whiting, Indiana was unknown.

Meanwhile, the British pound was recording losses for the day because the US dollar got a strong boost from the hawkish stance of the Fed chairman due to its safe-haven nature.