London midday: FTSE extends losses after Powell comments

(Sharecast News) - London stocks had fallen further by midday on Thursday after Federal Reserve chair Jerome Powell warned that Trump's tariffs could cause a spike in inflation. The FTSE 100 was down 0.8% at 8,213.51.

In a speech on Wednesday at the Economic Club of Chicago, Powell said that Trump's tariff regime was "significantly larger than anticipated".

"The same is likely to be true of the economic effects, which will include higher inflation and slower growth," he said.

"We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension."

Steve Clayton, head of equity funds at Hargreaves Lansdown, said: "Federal Reserve Chairman, Jerome Powell unnerved markets last night, warning of the potential impacts of current policy actions upon inflation and growth in the USA. He indicated that the Fed would probably put its anti-inflation mandate ahead of the target to see full employment in the USA if price pressures ticked higher.

"That led to selling on Wall Street, with the tech sector bearing the brunt."

Clayton said tariffs continue to make the headlines after Donald Trump claimed that "big progress" had been made in talks with Japanese negotiators.

"No details were given. Japan has strong links with the major US defence contractors and some US commentators are suggesting that tariff concessions may be granted if Japan ups its spending on US arms," he said. "Asian markets took the news as a reason to recover some of the previous session's losses, with Japan's Nikkei index posting gains of over 1%.

"Investors will have to become accustomed to information deficits under this most transactional of Presidents. Trump's tactics so far have been to claim that injustices have been inflicted upon America and that punishments will be delivered, unless the offending nations bring something shiny to the table. With negotiations happening behind closed doors, investors are left guessing. But with most of the Reciprocal Tariffs stayed for three months, the window of uncertainty is not that long."

Looking ahead to the rest of the day, investors were eyeing the latest policy announcement from the European Central Bank, which is widely expected to announce a 25 basis points rate cut.

In equity markets, Fresnillo, Unite Group, Rolls-Royce, BAE Systems, Jupiter Fund Management, Weir Group and Travis Perkins all lost ground as they traded without entitlement to the dividend.

On the upside, pest control firm Rentokil rallied as it reported a rise in first-quarter revenue despite a softer performance form its North America business.

Sainsbury's racked up healthy gains as it said full-year underlying pre-tax profit rose 8.6% to £761m but also cautioned it does not expect any profit growth in the next year. Tesco also advanced.

Dunelm shot higher as the homeware retailer said it was on track to meet consensus expectations for full-year profit as it reported a jump in third-quarter sales.

Deliveroo advanced as it hailed a strong first-quarter performance, with gross transaction value 9% higher and order growth of 7%.

Market Movers

FTSE 100 (UKX) 8,213.51 -0.75% FTSE 250 (MCX) 19,182.00 -0.44% techMARK (TASX) 4,369.61 -1.23%

FTSE 100 - Risers

Rentokil Initial (RTO) 347.30p 4.20% Sainsbury (J) (SBRY) 255.20p 2.90% Tesco (TSCO) 351.80p 1.79% Prudential (PRU) 786.60p 1.44% JD Sports Fashion (JD.) 73.96p 1.26% Associated British Foods (ABF) 2,185.00p 1.20% Land Securities Group (LAND) 570.00p 0.97% Bunzl (BNZL) 2,304.00p 0.61% Rio Tinto (RIO) 4,376.50p 0.54% Auto Trader Group (AUTO) 794.80p 0.51%

FTSE 100 - Fallers

Fresnillo (FRES) 1,023.00p -5.37% Admiral Group (ADM) 3,162.00p -2.95% Rolls-Royce Holdings (RR.) 703.20p -2.90% Unite Group (UTG) 846.50p -2.87% BAE Systems (BA.) 1,693.00p -2.81% Melrose Industries (MRO) 409.30p -2.41% Airtel Africa (AAF) 159.90p -2.38% Anglo American (AAL) 1,987.20p -2.30% Spirax Group (SPX) 5,820.00p -2.27% CRH (CDI) (CRH) 6,402.00p -2.11%

FTSE 250 - Risers

Dunelm Group (DNLM) 1,020.00p 7.59% Deliveroo Class (ROO) 134.30p 3.23% AO World (AO.) 96.90p 2.00% Discoverie Group (DSCV) 570.00p 1.79% Harbour Energy (HBR) 159.40p 1.53% Telecom Plus (TEP) 1,764.00p 1.38% B&M European Value Retail S.A. (DI) (BME) 318.40p 1.37% Mitie Group (MTO) 132.60p 1.22% Chrysalis Investments Limited NPV (CHRY) 93.80p 1.19% Urban Logistics Reit (SHED) 144.20p 1.12%

FTSE 250 - Fallers

Jupiter Fund Management (JUP) 69.40p -4.93% Twentyfour Income Fund Limited Ord Red (TFIF) 108.60p -3.89% Grafton Group Ut (CDI) (GFTU) 873.00p -3.81% Chemring Group (CHG) 380.00p -2.94% Hays (HAS) 67.75p -2.87% Man Group (EMG) 154.70p -2.83% Travis Perkins (TPK) 517.50p -2.73% Wizz Air Holdings (WIZZ) 1,433.00p -2.72% Bridgepoint Group (Reg S) (BPT) 249.00p -2.43% Mobico Group (MCG) 60.20p -2.35%