London’s FTSE 100 marked its worst session in nearly three weeks, dragged down by commodity-linked and bank stocks, while a stronger pound weighed on export-oriented companies. The blue-chip index dropped 0.9%, pulled down by miners, energy and major banking stocks.
Dollar-earnings consumer staples companies Unilever, Diageo, and British American Tobacco were among the biggest drags on the export-heavy index. Britain’s 2 trillion-pound ($2.8 trillion) debt is becoming more exposed to inflation. Richard Hughes, chairman of the country’s budget watchdog, said that the interest rate shocks are themselves becoming more frequent. Danni Hewson, financial analyst at AJ Bell says that the inflation woes certainly seem to have gripped UK investors, today following a pretty grim report from the government’s public spending watchdog. High levels of public debt are more vulnerable than ever to rising interest rates.
The FTSE 100 has gained nearly 10% so far this year. This gain is all on government stimulus support and record low interest rates. But it has largely underperformed its European and domestic mid-cap peers and still continues to be one of the lowest valued markets. Ocado, a British group slipped 4.2%. This is despite the company saying the demand for its grocery business and technology remained strong after its announcement of 20% rise in first-half retail revenue. Private equity firm Bridgepoint said that it would list on the London Stock Exchange. And this is to raise 300 million pounds ($417 million) to support its growth plans as the sector revs up.
