FTSE 100 Continues its Decline as Inflation Rises, With the added Pressure of Concerning Data from China.
Britain’s FTSE 100 on Wednesday extended its early-week sell-off as expectations for interest rate cuts this year fell due to stronger-than-expected inflation, while weak data from China weighed on stocks. shares linked to raw materials.
The blue-chip index (.FTSE) fell 1.3%, extending losses for a third consecutive session and hitting a 1.5-month low.
Sterling gained as data showed the UK’s annual rate of consumer price inflation rose for the first time in 10 months in December, with a rise in tobacco taxes behind the rise.
Consumer price inflation rose 4.0 percent last month, beating economists’ expectations for a 3.8 percent increase.
The data undermined investor confidence that the Bank of England (BoE) will begin cutting rates in May this year. Traders are pricing in a more than 50% chance that the central bank will keep rates unchanged in May.
“The rise in inflation is a wake-up call for investors who believe the BOE is “cold turkey” on keeping inflation on target,” said Victoria Clarke, chief UK economist at Santander CIB.
“We think the BOE won’t be eager to make cuts anytime soon; we still have the summer before the first cut.”
Rate-sensitive homebuilder stocks (.FTNMX402020) and REITs (.FTNMX351020), fell about 2.5% each in a new tab, on the prospect of rates holding higher for longer.
Energy and mining giants like Shell (SHEL.L) and Glencore (GLEN.L) thanks to weak commodity prices, and data shows that in 2023 China’s economy will grow at 5.2 percent. which is slightly higher. More. official target, but the recovery was more volatile than many analysts expected.
UK-listed shares of Antofagasta ( ANTO.L ) opened down 2.9% after the Chilean miner reported a 2% rise in copper production in 2023, but left its outlook unchanged production by 2024.
The FTSE 250 mid-cap index (.FTMC) fell 1.6% to a one-month low.
888 Holdings (888.L) opened a new tab after falling 14.2% after speculators predicted its 2024 earnings would be below market expectations due to its heavy investment in artificial intelligence and other investment programs. automation. – Compensation for savings measures.