By Barbara Kollmeyer
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 /zigman2/quotes/210598409/delayed UK:UKX +0.64% fell 1.4% to 6,933.48, with the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.3995% down 0.2% to $1.4158, as the dollar /zigman2/quotes/210598269/delayed DXY -0.07% 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.
“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 /zigman2/quotes/211629951/delayed CL.1 +0.30% — with crude prices over 2% lower — and copper /zigman2/quotes/210054311/delayed HG00 -0.35% prices were down 3%. Those losses hit heavily weighted commodity-themed stocks listed in London, with shares of energy companies BP /zigman2/quotes/202286639/delayed UK:BP -0.42% /zigman2/quotes/207305210/composite BP +0.68% and Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA -0.24% /zigman2/quotes/205095589/composite RDS.A +0.76% down over 2% and 3%, respectively. Shares of miner Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -0.04% /zigman2/quotes/202627887/composite RIO +1.44% fell over 3%, with fellow miner BHP /zigman2/quotes/208108397/composite BHP +1.27% /zigman2/quotes/203323256/delayed UK:BHP -0.51% down 4%.
A lone gainer was Ferguson /zigman2/quotes/202546598/composite FERG -0.86% /zigman2/quotes/209006722/delayed UK:FERG +1.21% , with shares up over 1%, after the seller of plumbing and heating products lifted full-year guidance on better-than-expected third-quarter results.