Monday 22 February 2021 9:18 am

FTSE 100 tumbles as inflation concerns mount

London’s FTSE 100 tumbled 0.68 per cent today by midday, as higher commodity prices sparked fears of a spike in inflation.

The fall was led by declines in consumer staples and industrials stocks, as investors awaited Boris Johnson’s plan for a phased easing of business restrictions.

The prime minister will plot a path out of lockdown on Monday in a bid to gradually reopen the wounded £3tn economy.

The FTSE 250 similarly fell 0.58 per cent today.

Across the pond Wall Street’s main indexes opened lower today as climbing Treasury yields and prospects of rising inflation triggered valuation concerns, hitting shares of technology-related companies.

The Dow Jones Industrial Average fell 113.2 points, or 0.36 per cent, at the open to 31381.12. The S&P 500 fell 21.2 points, or 0.54 per cent, at the open to 3885.55​, while the Nasdaq Composite dropped 160.3 points, or 1.16 per cent, to 13714.202 at the opening bell. 

Sterling up

Elsewhere the pound hit a new three-year high of $1.4050 in early London trading on Monday, before stabilizing around the $1.40 level.

It comes as bullish investors bet on the UK’s vaccination rollout bringing about an economic recovery.

Sterling rose to its highest levels since April 2018 when it crossed $1.40 on Friday, having risen 2.4 per cent so far in 2021.

The FTSE 100 has recovered nearly 35 per cent from its March 2020 lows.

It is nearly 13 per cent away from its highest level last year, thanks to record stimulus measures and massive vaccine rollouts.

While higher prices muted the commodity-heavy FTSE 100, the FTSE 250 also dropped by 0.8 per cent, led by declines in financial stocks.

G4S was the biggest faller on the index after GardaWorld refused to raise its offer, clearing the way clear for the higher bid lodged by rival Allied Universal to succeed.

Market movers

The morning’s biggest winner was British Airways-owner IAG, rising almost 6 per cent, followed by mining company Glencore, up by more than 4.6 per cent.

IAG said it raised total liquidity by £2.45bn, reaching final agreement for a £2bn loan, and through a deal to defer £450m of pension deficit contributions.

Flutter Entertainment and Antofagasta also rose 4 per cent and 2.7 per cent respectively.

Credit scorer Experian was the morning’s biggest faller, dropping by more than 4.2 per cent, closely followed by Ocado’s 3.9 per cent hit.

Meanwhile, Oil heavyweights BP and Royal Dutch Shell dipped 0.1 per cent and 0.3 per cent respectively, despite higher crude prices.

Around the world

Elsewhere, Chinese blue-chips slipped by almost 1.5 per cent after touching record highs last week, as concerns over policy tightening deterred investors.

Europe’s eurostoxx 50 and FTSE future both dropped 0.3 per cent and 0.7 per cent respectively.

European shares fell 1 per cent as hopes of a vaccine-led global economic recovery fuelled a rally in commodities and raised concerns over the risk of higher inflation.

The pan-European STOXX 600 index was on course for its worst day this month, led by declines in technology companies and retail stocks.

Germany’s benchmark stock index fell the most among its European peers, down 1.3 per cent.

Share
Tags: