London close: Stocks dragged lower as inflation concerns continue to weigh

(Sharecast News) - London stocks finished lower having underperformed throughout the session as traders in London were forced to catch-up with selling on global markets over the bank holiday. "Unfortunately, markets will be at risk for some time yet, with inflationary pressures ensuring that rates remain higher for longer," said IG senior market analyst Josh Mahony.

"[...] The story is no better in the UK, with Goldman Sachs warning that we could see inflation reach a whopping 22% next year if natural gas prices remain elevated."

The FTSE 100 was 0.88% weaker at 7,361.63 and the yield on the benchmark 10-year Gilt was up by eight basis points to 2.692%.

Better-than-expected readings on US job openings and consumer confidence published during the afternoon appeared to trigger the downside reversal in markets.

In parallel, front-dated Brent crude oil futures erased 4.85% to end at $100.24, alongside further steep losses in natural gas futures.

Meanwhile, sterling was near its lowest level against the dollar since March 2020, slipping 0.33% to $1.1670, amid growing concerns about the UK economy and following a hawkish speech from US Federal Reserve chair Jerome Powell.

Speaking at Jackson Hole on Friday, Powell said that getting back to price stability would "likely require maintaining a restrictive policy stance for some time".

A weaker pound tends to boost the FTSE 100 as around 70% of its constituents derives their earnings from overseas - but not on Tuesday.

Elsewhere on the macro front, Pantheon Macroeconomics said figures from the Bank of England released earlier showed that households are still saving less and borrowing more, but that this alone won't prevent a recession this winter.

House purchase mortgage approvals edged up to 63,800 in July from 63,200 in June, coming above consensus expectations of 62,000. Meanwhile, net consumer credit rose by £1.4bn in July, above its 2015-to-19 average of £1.3bn, but slightly below consensus expectations of £1.5bn.

In equity markets, banks were among the top performers amid the prospect of higher rates, with Barclays, Lloyds, HSBC and Standard Chartered all up.

Dechra Pharmaceuticals rallied as it announced the acquisition of California -based veterinary pharmaceutical manufacturer Med-Pharmex for $260m (£221.5m).

Bunzl slumped even as it lifted its full-year margin outlook and posted a jump in first-half profit and revenue as product cost inflation and volume growth more than offset an expected decline in Covid-related sales.

AstraZeneca was also in the red even as clinical trial results showed that its Farxiga treatment against Type II diabetes significantly reduced the risk of cardiovascular death or worsening of heart failure in patients with mildly reduced or preserved ejection fraction.

Market Movers

FTSE 100 (UKX) 7,361.63 -0.88% FTSE 250 (MCX) 19,149.65 -0.10% techMARK (TASX) 4,336.91 -0.75%

FTSE 100 - Risers

Smith (DS) (SMDS) 268.10p 2.84% Dechra Pharmaceuticals (DPH) 3,532.00p 2.67% Entain (ENT) 1,279.00p 2.61% Smurfit Kappa Group (CDI) (SKG) 2,870.00p 2.43% JD Sports Fashion (JD.) 112.30p 2.42% Associated British Foods (ABF) 1,541.50p 1.72% Next (NXT) 5,826.00p 1.64% Barclays (BARC) 164.70p 1.60% Sainsbury (J) (SBRY) 205.70p 1.48% 3i Group (III) 1,209.00p 1.34%

FTSE 100 - Fallers

NATWEST GROUP (NWG) 249.00p -7.85% Endeavour Mining (EDV) 1,659.00p -6.90% Centrica (CNA) 76.56p -6.59% Bunzl (BNZL) 2,924.00p -6.13% Antofagasta (ANTO) 1,108.00p -5.62% Fresnillo (FRES) 691.20p -5.08% SSE (SSE) 1,711.00p -5.08% Anglo American (AAL) 2,786.50p -4.65% Harbour Energy (HBR) 468.70p -4.33% AstraZeneca (AZN) 10,970.00p -3.47%

FTSE 250 - Risers

Baltic Classifieds Group (BCG) 151.60p 8.75% Polymetal International (POLY) 210.00p 5.00% Currys (CURY) 63.50p 4.10% Aston Martin Lagonda Global Holdings (AML) 445.00p 3.83% TUI AG Reg Shs (DI) (TUI) 131.15p 3.53% Ashmore Group (ASHM) 205.60p 3.26% Royal Mail (RMG) 275.30p 3.11% Network International Holdings (NETW) 240.40p 3.09% ASOS (ASC) 717.50p 2.94% Dr. Martens (DOCS) 242.40p 2.89%

FTSE 250 - Fallers

Ascential (ASCL) 207.60p -5.46% Drax Group (DRX) 670.50p -5.10% Diversified Energy Company (DEC) 133.30p -4.58% Hochschild Mining (HOC) 65.25p -3.48% Ferrexpo (FXPO) 149.90p -3.41% 888 Holdings (DI) (888) 124.50p -3.19% Carnival (CCL) 729.40p -2.77% Energean (ENOG) 1,352.00p -2.66% BlackRock World Mining Trust (BRWM) 628.00p -2.63% Chrysalis Investments Limited NPV (CHRY) 74.00p -2.50%