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FTSE 100 slips as slowdown worries, inflation fears persist

FTSE 100 slips as growth worries persist
FTSE 100 slips as growth worries persist   -   Copyright  Thomson Reuters 2021
By Reuters

By Shashank Nayar and Amal S

-London’s FTSE 100 ended lower on Friday as concerns about a slowdown in global economic growth outweighed gains in healthcare and energy stocks.

The blue-chip FTSE 100 index eased 0.4%, but snapped its three-week losing streak. Retailers, industrial miners and life insurers were the top losers.

“Miners were weak as investors started worrying about the potential fall-out should Evergrande go bust. Commodities demand could tumble if the Chinese property market experiences a crash,” said Russ Mould, investment director at AJ Bell.

Limiting further losses were healthcare stocks led by AstraZeneca, which jumped 2.0% after trials of its prostate cancer drug Lynparza showed positive results.

The index has gained nearly 1.3% this week, recording its best week since mid-August, with the healthcare and energy stocks leading the rally.

However, growing worries over energy bills, food costs and tax hikes prompted a hefty drop in British consumer confidence this month as people became more downbeat about the economic outlook.

“Persistent and rising inflation would suggest that central banks have to act soon to get the situation under control which means interest rate hikes sooner rather than later,” Mould added.

UK’s benchmark bond yields jumped to their highest since March 2020, signalling rising inflation pressures.

The FTSE 100 has gained nearly 9.5% so far this year on higher energy prices and accommodative central bank policies.

However, it has significantly underperformed a 17% rise in its European peers as worries over slowing economic growth coupled with higher inflation pressures weighed on investor sentiment.

The domestically focussed mid-cap index fell 0.9%, and marked its third weekly losses.

British outsourcer Mitie Group rose 2.0% after it raised its fiscal 2022 profit forecast.

Land Securities fell 1.4% after saying it sold two retail parks for 54.3 million pounds ($74.51 million) as part of a plan to exit its non-core businesses.

Petrofac gained 24.8% after the oilfield services provider reached a plea agreement with UK’s fraud prosecutor relating to the investigation into the company’s past dealings in the Middle East.