Commodity stocks and inflation data drag FTSE 100 down


Signage is seen outside the entrance to the London Stock Exchange in London, Britain. 23 August 2018. REUTERS / Peter Nicholls

London’s FTSE 100 fell on Wednesday, dragged down by heavy commodity stocks, as a larger-than-expected rise in inflation fueled fears the central bank would tighten monetary policy earlier than expected .

The blue chip index (.FTSE) fell 1.2%, miners (.FTNMX551020) fell 3.9% after falling metal prices. Oil majors BP (BP.L) and Royal Dutch Shell (RDSa.L) slipped more than 1% each.

The domestically-focused mid-cap FTSE 250 (.FTMC) index fell 0.4%.

Official figures show UK consumer price inflation more than doubled in April to 1.5%. The Bank of England is hopeful that the surge in inflation will be temporary as the economy recovers from last year’s COVID-19 crisis.

Rising regulated electricity and gas bills, as well as prices for clothing and footwear have pushed inflation up. Prices charged by manufacturers also rose 3.9%, while input prices rose 9.9%, the highest since February 2017. read more

“The UK market is a bit stuck in its range. What will inspire confidence will be the large-scale reopening in Western Europe and the United States, in the North American corridor, ”said Neil Wilson, chief market analyst at Markets.com.

“You also want to see Asian markets recover. The problem for the UK is that Asian markets are weighing on commodities. The increase in COVID-19 cases in Asia is therefore worrying.”

Globally, stocks have slipped and cryptocurrencies have sank as the threat of inflation has prompted investors to shy away from assets seen as vulnerable to any removal of the monetary stimulus.

Among individual stocks, Ferguson (FERG.L) climbed 2.2% to a record high after the plumbing and heating parts distributor reported a 65.4% jump in third-quarter profit.

The John Laing Group (JLG.L) jumped 11.2% after private equity firm KKR (KKR.N) agreed to buy out the UK infrastructure investor in a deal valued at about 2 billion pounds ($ 2.84 billion). [nL3N2N61FH]

Publisher Future (FUTR.L) gained 10.7% after its first half results exceeded market expectations. [nL2N2N61BS]

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