Fed hikes for the first time in three years; BoE's turn at noon

• Wall Street ended Wednesday lower after the Fed's rate rise: the Dow fell 1.21% (down 631 points) to 51,461.90, the S&P 500 lost 0.45% to 7,551.81 and the Nasdaq Composite was effectively flat at 25,978.42, down 0.01%. Those are last night's closes; the only live read on the American day is futures, and S&P 500 futures are trading at 7,661.25, well above the cash close, with Nasdaq 100 futures at 29,390.25.
• Asia is mixed into its close. The Nikkei 225 is up 0.07% at 63,966, while the Hang Seng is down 0.84% at 24,506.79 and the Shanghai Composite 0.40% lower at 3,876.02.
• Europe closed higher before the Fed: the FTSE 100 added 0.28% to 10,688.47, the DAX 0.53% and the CAC 40 0.62%.

The Federal Reserve raised its policy rate by a quarter point to a 3.75–4% target range — its first increase since 2023 — on a unanimous vote, and its projections point to one further rise this year. Chair Kevin Warsh used the press conference to insist inflation remains too high and that the economy is strengthening, which is what turned an orderly session into a slide: traders moved from pricing a one-off adjustment to pricing a sequence. The damage was concentrated where higher funding costs and a flatter curve bite hardest, with financials down 1.62%.

The larger single drag was energy, off 2.88%, and that is a commodity story rather than a Fed one. Brent is down 1.23% at $104.53 and WTI 1.22% lower at $101.18 after a sizeable build in US crude stocks and signals that the outage on Saudi Arabia's East-West pipeline will be measured in days. Having run up hard on Middle East supply risk, crude gave back some of it, and US energy names went with it — Diamondback, Matador and Magnolia all fell more than 8%.

The overnight recovery in futures is the more interesting move and has no dramatic cause: Warsh's credibility on inflation appears to have reassured rather than frightened, and rates volatility fell, with the MOVE index down 3.56% to 80.73. It is a rebound after a sell-off, not a change of regime — and it has not happened in cash equities yet.

This was a broad de-rating, not a narrow one: our US breadth showed 3,605 decliners against 2,135 advancers, a 0.59 ratio, with the mean listing down 0.18%. Dispersion tells the same story — PrimerIQ's median US energy name fell 2.26% and the median financial 1.20%, while technology held up at a 0.35% median decline. The VIX closed 2.97% higher at 17.71, firmer but not stressed, and gold's 0.94% fall to $4,346 argues against a genuine flight to safety. Britain was the outlier: 501 advancers to 269 decliners, a 1.86 ratio, on the back of the housebuilders.

Wednesday's ONS release put UK CPI at 3.1% in August, up from 2.9% in July and the highest since March, with core inflation unchanged at 2.6% — a print that lands awkwardly the day before a rate decision. Nothing of consequence has come from the ONS at 07:00 this morning.

The day's event is the Bank of England's decision and minutes at 12:00 BST. Bank Rate has been at 3.75% for five meetings; the July vote was 6–3 with three members already pushing for a hike, so the split matters as much as the outcome, and consensus still leans to a hold. Sterling has softened into it, down 0.6% at $1.3393.

Later today the US delivers housing starts, building permits, weekly jobless claims, the Philadelphia Fed manufacturing survey and pending home sales — the first hard data of the post-hike regime, and the manufacturing survey is expected to fall sharply from last month's reading.

Barratt Redrow was yesterday's standout, up 11.72% to 308.8p after full-year profit beat forecasts on a private reservation rate of 0.62 a week and a forward order book of 11,200 homes; gilt yields retreating at the same time carried the whole sector, with Bellway up 7.06%, Taylor Wimpey 5.87% and Persimmon 5.78%. In the US, JB Hunt fell 13.30% on a rare intra-quarter warning that third-quarter profit will come in 5–10% below expectations, blamed on driver costs and swings in fuel prices. This morning's UK corporate slate is still being digested and nothing material has been confirmed.