International Recap, June 18: Hawkish Central Bank Signals Pressure FTSE 100, While Risk-On Mood Lifts Nikkei 225

The FTSE 100 fell 1.04% to 10,400, while the Nikkei 225 rose 1.65% to 71,053. The session was driven mainly by central-bank rate signals, with a hawkish global backdrop pressuring London and a risk-on tone lifting Tokyo.

International market movers

The FTSE 100 was pushed lower by investors awaiting the Bank of England decision and digesting the Fed’s firmer policy tone, according to Reuters. Financials and materials weakened after the Bank of England held rates at 3.75%. Falling oil prices added pressure to energy-heavy parts of the index, as crude retreated following news of a US-Iran ceasefire.

The Nikkei 225 surged on easing Middle East tensions, with a US-Iran peace announcement supporting Japanese risk appetite and semiconductor strength. The MSCI EAFE rose alongside Japan, though London’s weaker session capped broader developed-market gains.

What this means for investors

While the Bank of England held rates steady at 3.75%, the FTSE dropped roughly 1% in reaction to U.S. Fed Chair Warsh’s hint that a rate hike isn’t out of the question. The biggest decliner on the FTSE was the London Stock Exchange Group, which slid 7% after an analyst downgrade from Rothschild Redburn.

Meanwhile, the Nikkei 225 hit new highs today, despite the Bank of Japan raising interest rates from 0.75% to 1% yesterday. This bullishness stems from oil-related relief from the Iran war MOU and a strong day for tech stocks worldwide.

Though rising interest rates and soaring stock prices don’t typically go hand in hand, Japan’s impressive financial results have left the market thinking that its decades of deflationary issues may be finally in the rearview mirror.

Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool recommends London Stock Exchange Group Plc. The Motley Fool has a disclosure policy.