Virtually every stock on the FTSE 100 was in the red on Wednesday, after data were released showing a rise in inflation, and following the global selloff.
The FTSE 100
UKX,
-1.54%
fell 1.4% to 6,933.48, with the pound
GBPUSD,
-0.30%
down 0.2% to $1.4158, as the dollar
DXY,
+0.15%
climbed against rivals. The pace of inflation in the U.K. as measured by the consumer-price index more than doubled in April, to an annual 1.5% from 0.7% in March.
That marks a high since the beginning of the COVID-19 pandemic, but still far short of the Bank of England’s official 2% target, and some don’t expect a sharp U-turn on monetary policy.
Read: Inflation Shot Up in April in the U.K. Here’s Why This Won’t Last.
“Indeed, much of the rise was ‘baked in the cake’ (largely energy base effects) with little evidence of general price momentum picking up — yet,” said the European economics team at Nomura, in a note to clients.
“However, that may only be a matter of time, with various price indicators in the surveys rising sharply, upstream price pressures clearly gathering pace and semiconductor shortages beginning to affect the supply — and no doubt ultimately the price — of many consumer products,” said the analysts.
Investors worldwide have been concerned that countries with too-hot economies, coming out of the COVID-19 pandemic, could see inflation climb, triggering the need for central banks to tighten up policy. The data weren’t enough to give sterling a boost, with the currency up 0.4% for the week, as investors have been pricing in expectations of stronger growth.
There was a sharp drop in oil prices
CL.1,
-5.22%
— with crude prices over 2% lower — and copper
HG00,
-3.86%
prices were down 3%. Those losses hit heavily weighted commodity-themed stocks listed in London, with shares of energy companies BP
BP,
-2.84%
BP,
-2.38%
and Royal Dutch Shell
RDSA,
-3.15%
RDS.A,
-2.51%
down over 2% and 3%, respectively. Shares of miner Rio Tinto
RIO,
-3.66%
RIO,
-3.66%
fell over 3%, with fellow miner BHP
BHP,
-4.77%
BHP,
-4.73%
down 4%.
A lone gainer was Ferguson
FERG,
+2.49%
FERG,
+2.09%,
with shares up over 1%, after the seller of plumbing and heating products lifted full-year guidance on better-than-expected third-quarter results.
