The UK’s FTSE 100 touched a more than three-month low on Thursday, in tandem with a sell-off in global equities, as jitters around rising interest rates held firm and as Sino-U.S. tensions further dampened the mood.
The blue-chip FTSE 100 closed down 2.2%, having hit its lowest intraday level since March 20. The domestically-focused FTSE 250 midcap index lost 2.6%
World stocks were set for their biggest daily fall of the year after strong U.S. jobs market data bolstered bets of another round of global interest-rate hikes.
Investor sentiment was also sapped by a hawkish tone in the minutes from the U.S. Federal Reserve’s June meeting released on Wednesday.
“It’s pretty clear that central banks in the UK, Europe and the U.S. certainly have a hawkish tilt,” said Steve Sosnick, chief strategist at Interactive Brokers.
“If you add in the idea that China is not going to be additive to global growth, that is not a great scenario for markets around the world.”
China-exposed bank HSBC and Standard Chartered fell 1.8% and 2.6% respectively, and insurer Prudential lost 2.5% on elevated Sino-U.S. tensions.
The FTSE 100 has shed 2.4% so far this year, compared with a 5.2% rise in pan-European STOXX 600 and a 14.5% gain in U.S. S&P 500, with the British benchmark index pressured by concerns of stagflation.
All major UK sectoral indexes traded in the red on Thursday, with retailers leading the declines, dragged by a 9.7% fall in Currys.
The electricals retailer fell to its lowest in more than 20 years on concerns about the economic outlook in its markets and following a 38% drop in its full-year profit.
Data showed British housebuilding fell in June at the sharpest pace in more than 14 years, barring two months early in the COVID-19 pandemic.
Homebuilders lost 3.4%.
Among the rare bright spots was United Utilities, up 1.5% after Morgan Stanley raised the water utility firm’s rating to “overweight” from “equal-weight.”
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