Source: Sharecast
The FTSE 100 was down 0.4% at 9,267.79.
Trump said on his social media platform Truth Social on Monday that he had "sufficient" reason to fire Cook based on allegations that she made false statements on mortgage agreements.
Russ Mould, investment director at AJ Bell, said: "A jump in US Treasury yields indicates that bond investors aren’t happy about how Trump continues to meddle with the Fed and threaten its independence.
"Equity markets were in the red across Europe and Asia, and futures prices imply Wall Street will follow suit when it opens for trading later today.
"Donald Trump is being relentless in his quest to lower interest rates. He has publicly called for the Federal Reserve to cut the cost of borrowing and has repeating criticised Fed chair Jerome Powell for not pursuing looser monetary policy.
"Even though Powell last week indicated a shift in Fed strategy with the implication that rates will be cut next month, Trump seems unsatisfied. He’s proceeded to sack Fed governor Lisa Cook which will drive speculation that the US president will push for a replacement governor more in line with his way of thinking. Cook has refused to resign, and the whole incident has caused financial markets to wobble once again.
"Importantly, the VIX volatility index has jumped 10% which suggests that investors have quickly switched from party-mode last Friday to now being cautious once again.
"If the drama in Washington wasn’t enough, a French political crisis has added to the storm. French government bond yields jumped and the blue-chip CAC 40 equity index slumped amid signs the minority government could be ousted."
On home shores, the latest shop price index from the British Retail Consortium and NIQ showed that food inflation hit its highest level in 18 months in August.
Shop price inflation rose 0.9% year-on year from 0.7% in July, while food inflation increased to 4.2% in August from 4.0% the month before.
BRC chief executive Helen Dickinson said: "Shop price inflation hit its highest rate since March last year, fuelled by food price rises. This adds pressure to families already grappling with the cost of living. Staples such as butter and eggs saw significant increases due to high demand, tightening supply, and increased labour costs. Chocolate also got more expensive as global prices of cocoa remain high owing to poor harvests. There was some respite for parents ahead of the new academic year, with lower prices for clothing, books, stationery, and computing.
"Retailers continue doing everything they can to limit price rises for households, but as the Bank of England acknowledged, the £7bn in new costs flowing through from last year’s Budget has created an uphill battle for retailers. That is why over 60 retail CEOs recently wrote to the Chancellor with a call to ensure there are no further taxes rises on retail this Autumn. The planned business rates reforms present an opportunity to deliver a meaningful reduction in retail, hospitality and leisure bills, ensure no shop pays more as a result and help retailers keep prices low for customers."
In equity markets, retailers were under the cosh after Deutsche Bank said in a research note that it was taking a more cautious view on the UK consumer.
The bank downgraded Primark owner AB Foods and Wickes to ‘sell’ from ‘hold’, while Kingfisher was downgraded to ‘hold’ from ‘buy’. DB cut its price target on AB Foods to 2,130p from 2,220p, on Wickes to 195p from 205p and on Kingfisher to 280p from 320p.
Kingfisher and AB Foods were the biggest losers on the FTSE 100, while Wickes suffered the heaviest losses on the FTSE 250.
British American Tobacco lost ground as it announced that chief financial officer Soraya Benchikh was stepping down with immediate effect.
On the upside, Bunzl jumped to the top of the FTSE 100 even as it reported a drop in first-half profit.
Richard Hunter, head of markets at Interactive Investor, said "bargain hunters sought the stock despite lower half year profit".
Market Movers
FTSE 100 (UKX) 9,267.79 -0.44%
FTSE 250 (MCX) 21,869.04 0.23%
techMARK (TASX) 5,413.52 -0.12%
FTSE 100 - Risers
Bunzl (BNZL) 2,488.00p 4.36%
Fresnillo (FRES) 1,721.00p 1.89%
Babcock International Group (BAB) 1,013.00p 1.30%
Shell (SHEL) 2,718.50p 0.98%
Anglo American (AAL) 2,222.00p 0.95%
BT Group (BT.A) 214.90p 0.84%
Antofagasta (ANTO) 2,185.00p 0.83%
AstraZeneca (AZN) 12,032.00p 0.53%
Tesco (TSCO) 428.30p 0.47%
BP (BP.) 425.10p 0.39%
FTSE 100 - Fallers
Kingfisher (KGF) 269.00p -4.34%
Associated British Foods (ABF) 2,219.00p -4.11%
Compass Group (CPG) 2,543.00p -2.83%
Convatec Group (CTEC) 236.20p -2.72%
Berkeley Group Holdings (The) (BKG) 3,694.00p -2.58%
Standard Chartered (STAN) 1,381.00p -2.54%
Schroders (SDR) 386.80p -2.47%
DCC (CDI) (DCC) 4,728.00p -2.31%
Weir Group (WEIR) 2,454.00p -2.31%
Rentokil Initial (RTO) 354.70p -2.18%
FTSE 250 - Risers
Hochschild Mining (HOC) 312.20p 3.86%
Burberry Group (BRBY) 1,251.50p 2.33%
International Workplace Group (IWG) 205.60p 1.98%
Energean (ENOG) 963.50p 1.53%
W.A.G Payment Solutions (WPS) 87.00p 1.40%
Endeavour Mining (EDV) 2,582.00p 1.18%
Harbour Energy (HBR) 232.60p 1.04%
Raspberry PI Holdings (RPI) 413.40p 0.83%
GCP Infrastructure Investments Ltd (GCP) 74.70p 0.81%
Bridgepoint Group (Reg S) (BPT) 342.80p 0.71%
FTSE 250 - Fallers
Wickes Group (WIX) 200.00p -9.30%
Close Brothers Group (CBG) 480.60p -4.07%
WH Smith (SMWH) 682.50p -4.01%
Kainos Group (KNOS) 696.50p -3.53%
Crest Nicholson Holdings (CRST) 164.30p -3.41%
Me Group International (MEGP) 198.20p -3.32%
Morgan Sindall Group (MGNS) 4,255.00p -3.30%
Kier Group (KIE) 195.40p -3.27%
SSP Group (SSPG) 157.90p -3.25%
Volution Group (FAN) 634.00p -2.91%