FTSE 100 drops on rising inflation concerns; miners, travel weigh

  • 10/12/2021
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Oct 12 (Reuters) - Miners and travel stocks pressured London"s FTSE 100 index on Tuesday, with investors also worried about higher energy costs, supply chain disruptions and a looming rate hike crimping economic recovery. The blue-chip FTSE 100 index (.FTSE) ended 0.2% lower, snapping its three-day winning streak, with miners (.FTNMX551030) and travel and leisure stocks (.FTNMX405010) among the top drags. On the macroeconomic front, the UK"s labour market showed signs of further recovery as employers added a record-high 207,000 staff to their payrolls in September. Separate data showed the unemployment rate fell to 4.5% in the three months to August, reinforcing bets for a Bank of England rate hike sooner. read more "The Bank of England is increasingly wary that the "cost-push" inflation from the recent surge in energy prices comes at a time when the labour market is tight and workers feel emboldened to ask for a pay rise," said Ambrose Crofton, global market strategist at J.P. Morgan Asset Management. "It worries that this threatens to reinforce an inflation feedback loop." The FTSE 100 has gained for the past four consecutive quarters and added nearly 10% this year on accommodative central bank policies and optimism over re-opening economies. However, the pace of gains has slowed as soaring energy costs and supply chain disruptions fanned inflation concerns, with the Bank of England hinting at adopting a more hawkish stance going ahead. Adding to inflation concerns, British grocery prices increased 1.7% in the four weeks to Oct. 3 year-on-year, market researcher Kantar said. read more "While investors want to believe the narrative that stock markets can continue to move higher, this belief is bumping up against the reality of how the continued rise in inflation pressures are likely to impact company profit margins," said Michael Hewson, senior analyst at CMC Markets UK. The domestically focussed mid-cap index (.FTMC) declined 0.04%. EasyJet (EZJ.L) dropped 3.6% as pandemic uncertainty and travel bans pushed the company to post an expected headline loss of between 1.135 billion pounds ($1.54 billion) and 1.175 billion pounds for the 12 months ended September. read more ($1 = 0.7370 pound) Reporting by Bansari Mayur Kamdar and Amal S; Additional reporting by Devik Jain; Editing by Amy Caren Daniel and Jonathan Oatis Our Standards: The Thomson Reuters Trust Principles.

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