London open: Stocks fall after Powell comments; Sainsbury's bucks trend

(Sharecast News) - London stocks fell in early trade on Thursday after Federal Reserve chair Jerome Powell warned that Trump's tariffs could cause a spike in inflation. At 0900 BST, the FTSE 100 was down 0.4% at 8,240.04.

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

On the upside, Sainsbury's rallied 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 gained.

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.

Pest control firm Rentokil nudged up as IT reported a rise in first-quarter revenue despite a softer performance from its North America business.

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) 8,240.04 -0.43% FTSE 250 (MCX) 19,190.36 -0.39% techMARK (TASX) 4,383.50 -0.91%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 257.60p 3.87% Bunzl (BNZL) 2,350.00p 2.62% Tesco (TSCO) 350.40p 1.39% JD Sports Fashion (JD.) 74.00p 1.31% Rio Tinto (RIO) 4,395.50p 0.98% Pershing Square Holdings Ltd NPV (PSH) 3,328.00p 0.85% Prudential (PRU) 781.40p 0.77% Rentokil Initial (RTO) 335.10p 0.54% BP (BP.) 356.10p 0.52% Associated British Foods (ABF) 2,168.00p 0.42%

FTSE 100 - Fallers

Fresnillo (FRES) 1,023.00p -5.37% Unite Group (UTG) 844.00p -3.16% BAE Systems (BA.) 1,705.50p -2.10% Rolls-Royce Holdings (RR.) 709.80p -1.99% Halma (HLMA) 2,620.00p -1.73% Weir Group (WEIR) 2,138.00p -1.66% Spirax Group (SPX) 5,860.00p -1.60% Admiral Group (ADM) 3,208.00p -1.53% CRH (CDI) (CRH) 6,442.00p -1.50% Intermediate Capital Group (ICG) 1,730.00p -1.48%

FTSE 250 - Risers

Dunelm Group (DNLM) 1,008.00p 6.33% Deliveroo Class (ROO) 132.20p 1.61% Harbour Energy (HBR) 159.00p 1.27% Diversified Energy Company (DEC) 890.00p 1.08% HGCapital Trust (HGT) 492.00p 0.92% Mitie Group (MTO) 132.20p 0.92% Watches of Switzerland Group (WOSG) 351.00p 0.86% GCP Infrastructure Investments Ltd (GCP) 73.00p 0.83% Scottish American Inv Company (SAIN) 490.00p 0.72% Foresight Solar Fund Limited (FSFL) 81.10p 0.62%

FTSE 250 - Fallers

Jupiter Fund Management (JUP) 69.40p -4.93% Twentyfour Income Fund Limited Ord Red (TFIF) 109.20p -3.36% Grafton Group Ut (CDI) (GFTU) 877.70p -3.29% Man Group (EMG) 154.50p -2.95% Travis Perkins (TPK) 516.50p -2.91% Ocean Wilsons Holdings Ltd. (OCN) 1,375.00p -2.83% Oxford Instruments (OXIG) 1,708.00p -2.62% 4Imprint Group (FOUR) 2,975.00p -2.30% Chemring Group (CHG) 383.00p -2.17% QinetiQ Group (QQ.) 387.80p -2.12%