(Reuters) – British shares closed lower on Monday as investors moved away from risk assets after last week’s U.S. jobs report reinforced views that the Federal Reserve would be cautious when it comes to to cut interest rates this year.
The blue-chip index fell 0.3%, while the country-focused midcap index fell 0.1%.
Global stocks fell while bond yields remained elevated after data on Friday showed U.S. job growth unexpectedly accelerated in December, while the unemployment rate fell to 4.1%.
U.S. government bond yields hit multi-month highs and traders priced in just one rate cut by the Federal Reserve this year.
British bonds have been at the center of a recent sell-off in the global bond market, with a sharp rise in borrowing costs fueling concerns about Britain’s fiscal sustainability. The 30-year bond yield jumped to a new 27-year high, while the 10-year bond yield stood at its highest level since 2008.
British mid-caps suffered a decline of around 3% last week on concerns that UK growth would be pressured by higher taxes and stagnant spending.
Inflation figures on both sides of the Atlantic, as well as quarterly UK GDP estimates, will be in focus later this week.
The energy sector was an outlier, rising 1.4% as crude prices rose on expectations that broader U.S. sanctions on Russian oil would force buyers in India and China to look elsewhere. suppliers. [O/R]
Higher prices weighed on airline shares, with IAG, owner of British Airways, Wizz Air and easyJet (LON:) falling between 2.2% and 3.6%.
Biotechnology company Oxford Nanopore Technologies rose 8.9% after forecasting full-year revenue of about 183 million pounds ($222.27 million), up from 169.7 million a year earlier.
PageGroup fell 3.2% after the recruiter issued its second profit warning in six months.