London stocks were firmly in the red by midday on Tuesday as worries about rising inflation rattled markets.
The FTSE 100 was down 2.3% at 6,959.61, having taken its cue from a selloff in US technology stocks overnight.
IG market analyst Chris Beauchamp said markets are caught between Chinese PPI figures released earlier, which confirmed the inflationary trend – even if it is ‘transitory’ – and US CPI numbers due on Wednesday that could well do the same.
“This could be enough to cancel out any remaining positive feeling from last Friday’s US job numbers, which for a brief while seemed likely to slay concerns about inflation, rate hikes and QE tapering,” he said.
Russ Mould, investment director at AJ Bell, said: “Some days investors appear relaxed about inflation risks and the possibility of central banks having to lift rates and withdraw stimulus. Today is not one of those days as, after last night’s big sell-off on Nasdaq, the FTSE 100 finds itself undoing much of its recent progress and trading below 7,000.
“Surging commodity prices are acting as a canary in the coal mine for inflation – with the huge infrastructure and stimulus packages in the US a key contributing factor.
“The valuations of the tech-based growth companies in the US are harder to justify in an inflationary and rising interest rate environment – where lower risk assets typically offer higher returns – hence the big fall in the Nasdaq yesterday.”
In equity markets, engineer Renishaw – which put itself up for sale in March – was under the cosh following a report the company is struggling to attract takeover interest due to a high valuation and list of ownership demands. According to Bloomberg, rival engineering firms Hexagon, Schneider Electric and Siemens have all decided against pursuing Renishaw.
Stocks with exposure to the travel industry were also down amid lingering disappointment over the government’s ‘green list’, which did not include popular destinations such as France, Spain, Italy or Greece. British Airways and Iberia parent IAG, GKN owner Melrose and engine maker Rolls-Royce were all weaker, along with easyJet and Wizz Air.
UK supermarket Morrisons bucked the trend as it reported a rise in first-quarter sales and reiterated guidance for higher full-year profits and reduced debt as the economy rebounded from the Covid-19 pandemic.
Market Movers
FTSE 100 (UKX) 6,959.61 -2.30%
FTSE 250 (MCX) 22,241.42 -2.01%
techMARK (TASX) 4,235.60 -2.33%
FTSE 100 – Risers
BT Group (BT.A) 170.80p -0.03%
RSA Insurance Group (RSA) 683.60p -0.06%
Fresnillo (FRES) 918.20p -0.22%
Sainsbury (J) (SBRY) 255.00p -0.43%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,842.00p -0.47%
Pearson (PSON) 836.40p -0.69%
Antofagasta (ANTO) 1,870.50p -0.69%
Polymetal International (POLY) 1,597.00p -0.90%
Lloyds Banking Group (LLOY) 47.34p -1.07%
British Land Company (BLND) 538.20p -1.21%
FTSE 100 – Fallers
Renishaw (RSW) 5,660.00p -6.14%
Melrose Industries (MRO) 157.50p -5.41%
JD Sports Fashion (JD.) 872.60p -4.74%
International Consolidated Airlines Group SA (CDI) (IAG) 200.00p -4.69%
Rolls-Royce Holdings (RR.) 104.66p -4.58%
Scottish Mortgage Inv Trust (SMT) 1,087.50p -4.56%
Next (NXT) 7,948.00p -4.47%
Experian (EXPN) 2,609.00p -4.15%
Mondi (MNDI) 1,880.00p -4.08%
InterContinental Hotels Group (IHG) 4,789.00p -3.84%
FTSE 250 – Risers
Greencore Group (CDI) (GNC) 169.40p 4.57%
FirstGroup (FGP) 74.50p 1.43%
Morrison (Wm) Supermarkets (MRW) 184.70p 0.90%
Premier Foods (PFD) 98.60p 0.61%
Royal Mail (RMG) 521.20p 0.42%
Signature Aviation (SIG) 395.50p 0.00%
Hipgnosis Songs Fund Limited C Shs NPV (SONC) 112.50p 0.00%
Foresight Solar Fund Limited (FSFL) 98.00p 0.00%
Aggreko (AGK) 860.50p -0.06%
FDM Group (Holdings) (FDM) 994.00p -0.10%
FTSE 250 – Fallers
Allianz Technology Trust (ATT) 248.00p -6.06%
Baillie Gifford US Growth Trust (USA) 270.00p -5.92%
Playtech (PTEC) 453.40p -4.75%
Edinburgh Worldwide Inv Trust (EWI) 301.00p -4.60%
Dr. Martens (DOCS) 458.40p -4.58%
Provident Financial (PFG) 241.00p -4.29%
Rank Group (RNK) 180.80p -4.14%
Syncona Limited NPV (SYNC) 209.00p -4.13%
JPMorgan Japanese Inv Trust (JFJ) 608.00p -4.10%
Impax Environmental Markets (IEM) 448.50p -4.06%
