London open: Stocks fall amid bond market selloff; Tesco rallies

(Sharecast News) - London stocks fell in early trade on Wednesday following weak US and Asian sessions, as worries about higher-for-longer rates rattled investors. At 0820 BST, the FTSE 100 was down 0.4% at 7,441.23.

Stocks in the US and Asia slid and US Treasury yields jumped after better-than-expected JOLTS job openings data sparked fears over interest rates.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Chill winds of worry are swirling about high interest rates settling in and there is set to be little respite from the sell-off. Investors have again been reminded by central bank policymakers in the US that the screws may have to be tightened on monetary policy again, and kept there for some time, to stop inflation whipping higher again.

"This fresh bout of anxiety has been prompted by new jobs data in the US indicating that vacancies unexpectedly jumped in August. This has added to worries about labour market tightness, and led to expectations that not only will there be another interest rate hike, to try and dampen down demand in the economy, but that any prospect for rate cuts has been pushed further into the distance."

Turmoil in Washington added to the downbeat mood after Kevin McCarthy - who helped to broker the debt ceiling agreement - was ousted as Speaker of the House of Representatives.

"This not only bodes ill for future debate on the debt ceiling, with fresh impasse expected, but this bout of political dysfunction could have much wider policy repercussions," said Streeter.

On the macro front, the S&P Global/CIPS UK services purchasing managers' index for September is due at 0930 BST, while across the pond, the ADP report for September is at 1315 BST.

In equity markets, Tesco rallied as it hiked its retail profit and cash flow targets after a strong first half, with sales rising on the back of easing inflation.

Group sales excluding fuel were up 8.9% year-on-year to £30.7bn in the six months to 26 August, with inflation falling across the half and volume and sales mix trends ahead of expectations.

Spirent Communications tumbled more than 30% as it cut its near-term outlook, highlighting an "extremely challenged" telecommunications market and the fact its largest customers have delayed their expenditure and technology investments.

In broker note action, Relx was lifted by an upgrade to 'buy' at Goldman Sachs, while Severn Trent was boosted by an upgrade to 'neutral' from 'underweight' at JPMorgan Cazenove.

Caterer Compass Group was higher after an upgrade to 'sector perform' at RBC Capital Markets, but Legal & General fell after a downgrade to 'hold' at Jefferies.

Market Movers

FTSE 100 (UKX) 7,441.23 -0.39% FTSE 250 (MCX) 17,575.61 -0.58% techMARK (TASX) 4,158.35 -0.49%

FTSE 100 - Risers

Tesco (TSCO) 262.80p 1.23% Relx plc (REL) 2,791.00p 1.12% Severn Trent (SVT) 2,290.00p 0.79% Smurfit Kappa Group (CDI) (SKG) 2,672.00p 0.75% National Grid (NG.) 938.80p 0.73% Compass Group (CPG) 1,999.50p 0.71% Next (NXT) 7,166.00p 0.56% United Utilities Group (UU.) 916.60p 0.39% Pershing Square Holdings Ltd NPV (PSH) 2,982.00p 0.34% Pearson (PSON) 870.20p 0.25%

FTSE 100 - Fallers

Legal & General Group (LGEN) 208.40p -2.11% Phoenix Group Holdings (PHNX) 453.80p -1.92% Endeavour Mining (EDV) 1,518.00p -1.49% Ashtead Group (AHT) 4,769.00p -1.45% Antofagasta (ANTO) 1,351.50p -1.31% Glencore (GLEN) 447.45p -1.28% Lloyds Banking Group (LLOY) 42.29p -1.23% Fresnillo (FRES) 530.40p -1.19% Airtel Africa (AAF) 120.40p -1.15% SEGRO (SGRO) 692.60p -1.11%

FTSE 250 - Risers

Edinburgh Worldwide Inv Trust (EWI) 138.00p 2.53% Breedon Group (BREE) 330.00p 1.07% Ithaca Energy (ITH) 168.00p 0.96% Digital 9 Infrastructure NPV (DGI9) 40.00p 0.88% JPMorgan Emerging Markets Inv Trust (JMG) 103.00p 0.78% Templeton Emerging Markets Inv Trust (TEM) 147.80p 0.68% Diversified Energy Company (DEC) 72.10p 0.42% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 430.50p 0.35% Ninety One (N91) 160.50p 0.31% Keller Group (KLR) 724.00p 0.28%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 255.00p -6.32% Bridgepoint Group (Reg S) (BPT) 176.90p -4.43% FDM Group (Holdings) (FDM) 475.00p -3.65% Marshalls (MSLH) 230.60p -3.11% SThree (STEM) 349.00p -2.79% 888 Holdings (DI) (888) 93.10p -2.62% Essentra (ESNT) 165.20p -2.36% Trainline (TRN) 258.20p -2.34% easyJet (EZJ) 411.30p -2.33% Ceres Power Holdings (CWR) 282.20p -2.29%