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Pedestrians enter the London Stock Exchange in London, Britain on August 15, 2017. REUTERS/Neil Hall/File Photo
Aug 23 (Reuters) – Britain’s mid-cap index hit a fresh one-month low on Tuesday amid a looming gas crisis in Europe and data showing slower-than-expected growth in business activity fueled fears of a recession.
The domestic-focused FTSE 250 (.FTMC) fell 0.1%, down for a third straight session, as rising UK gas prices added to fears of inflation weighing on the economy. EU/NG
The exporter-heavy FTSE 100 (.FTSE) slipped 0.3%, dragged down by pharmaceuticals and consumer goods companies. But oil majors Shell ( SHEL.L ) and BP ( BP.L ) inched higher, supported by rising crude prices.
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A closely-watched survey showed Britain’s private sector growth slowed in August as factory output slowed and the largest services sector expanded modestly. Read more
“While they are still growing, there are fears that they could enter contractionary territory,” said David Madden, market analyst at Equity Capital in London.
“In addition, the Bank of England (BoE) has raised interest rates several times, but they have not been able to control inflation. So now they will probably continue to hike rates and make the whole situation worse.”
Britain’s consumer price inflation is set to rise 18.6% in January, more than nine times the BoE’s target, an economist at US Bank Citi said on Monday, raising its forecast again in light of a jump in energy prices. Read more
Investors expect another 50 bps rate hike when the central bank meets next month.
The Financial Times reports that Liz Truss plans to take urgent action to tackle the cost of living shortly after becoming Prime Minister without an accompanying economic forecast.
Among individual stocks, BT Group ( BT.L ) rose 1.5 percent after the British government ruled that billionaire Patrick Drahi would not be forced to cut his 12.1 percent stake in the company due to any national security implications. Read more
Wood Plc ( WG.L ), an oilfield services and engineering company, fell 3.9 percent after reporting a 5 percent drop in first-half revenue.
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Reporting by Johan M Cherian and Sruthi Shankar in Bengaluru; Editing by Krishna Chandra Eluri and Dhanya Ann Thoppil
Our standards: The Thomson Reuters Trust Principles.
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