FTSE 100 falls to two-month low as inflation fears rise

The FTSE 100 index of leading shares fell 1.1 per cent on Monday morning

The blue-chip index was on track for its fifth consecutive day of losses (PA)

The UK’s leading share index fell to its lowest level in around two months on Monday as worries over inflation and rising bond yields took their toll on global equity markets and a survey showed Britain’s economy slowed sharply in January.

The FTSE 100 lost 1.4 per cent and is down more than 4.5 per cent so far this year, partly weighed down by a continued recovery in the pound from post-Brexit lows.

Internationally focused companies had previously seen their stock prices buoyed by a weak pound that boosted revenues made in other currencies.

This session was the fifth consecutive day of losses for the index, its longest losing streak since November, in a broad-based sell-off where only a handful of stocks were trading in positive territory.

“Equity nervousness seems to be about repricing for higher yields and tighter Fed policy and the fear that the bond market has broken out of its three-decade bull market,” said Neil Wilson, analyst at ETX Capital in London.

Consumer staple stocks were the biggest weight on the FTSE, taking a combined 27 points or more off the blue chip index.

Among the few stocks which ended the day in positive territory were miners Antofagasta, Glencore and Anglo American, up 1.6 per cent, 1.1 per cent and 0.3 per cent respectively as the sector found support in a rebound in metal prices.

Randgold posted the worst performance of the index after it reported 2017 profits and said it would participate in a campaign to overturn a new mining code in Democratic Republic of Congo.

An outperformer was Kingfisher, which rose 2.3 per cent to the top of the FTSE.

Traders said the stock was supported by hopes for an easing of competition after rival Wesfarmers wrote off British hardware chain Homebase for more than its purchase price, saying it had made a series of mistakes

Tesco fell 1.7 per cent. Britain’s biggest retailer said profit for the full 2017-18 year would be slightly ahead of analysts’ expectations and confirmed it would pay a final dividend. It also said Booker boss Charles Wilson would stay on and run its entire UK business once it completes the 3.7 billion pound takeover of the wholesaler.

Ryanair fell 1.7 per cent. The airline posted a 12 per cent rise in fourth-quarter profit but warned of possible further disruption by pilots and said it was not optimistic about average fares in European short-haul in the summer.

Reuters