London’s FTSE 100 was down 1% at 7,440.46 in afternoon trade on Thursday.
Next was on the back foot after the clothing retailer upgraded full-year profits guidance and announced a special dividend after Christmas sales exceeded expectations, but warned over the impact of inflation on sales in 2022.
Russ Mould, investment director at AJ Bell, said: “More recently, Next looks to have benefited from more people buying suits as they returned to the office, and more dresses and smart clothes for the return of socialising. However, the tail end of 2021 would have been negatively affected by Omicron putting people off mixing in public.
“Looking ahead, 2022 is shaping up to be a more challenging year. Household bills are going up thanks to soaring energy prices and higher interest rates, and the forthcoming National Insurance hike will also leave less money in people’s pockets.
“Those fortunate enough to have saved some cash during the various pandemic lockdowns may still have some of this money left to act as a buffer for the higher cost of living. However, there is still a real risk that a lot of people are going to look hard at their finances and scale back on spending, particularly if the cost of goods in the shops is also going up.
“Next is wise to recognise these challenges and has set fairly low expectations as a result.”
Going the other way, banks were on the rise following hawkish minutes from the Federal Reserve on Wednesday, which revealed the US central bank may raise rates sooner than expected to tackle rising inflation. Standard Chartered, HSBC, Lloyds, NatWest and Barclays were all up.
FTSE 100 – Risers
Standard Chartered (STAN) 478.30p 3.93%
HSBC Holdings (HSBA) 478.50p 2.18%
Lloyds Banking Group (LLOY) 51.60p 1.82%
NATWEST GROUP PLC ORD 100P (NWG) 241.50p 1.73%
Rio Tinto (RIO) 5,106.00p 1.41%
British American Tobacco (BATS) 2,828.00p 1.34%
International Consolidated Airlines Group SA (CDI) (IAG) 162.86p 1.27%
WPP (WPP) 1,172.00p 1.03%
Barclays (BARC) 199.82p 0.96%
ITV (ITV) 115.25p 0.66%
FTSE 100 – Fallers
Relx plc (REL) 2,225.00p -5.28%
Experian (EXPN) 3,391.00p -5.07%
Aveva Group (AVV) 3,176.00p -4.54%
Halma (HLMA) 2,997.00p -4.40%
Dechra Pharmaceuticals (DPH) 4,612.00p -3.84%
Croda International (CRDA) 9,444.00p -3.71%
Next (NXT) 7,740.00p -3.71%
Spirax-Sarco Engineering (SPX) 15,520.00p -3.57%
Fresnillo (FRES) 825.20p -3.55%
Flutter Entertainment (CDI) (FLTR) 11,425.00p -3.46%
