London open: Stocks slump after unexpected rise in US inflation
(Sharecast News) - London stocks fell sharply in early trade on Thursday, taking their cue from a weak session on Wall Street after an unexpected rise in US inflation.
At 0840 BST, the FTSE 100 was down 1.7% at 6,888.87.
Spreadex analyst Connor Campbell said: "Though Europe was able to avoid succumbing to Wednesday's inflation fears, ballooning losses overnight in the US, and a tough session in Asia, weakened the region's defences come the opening bell.
"The Dow Jones was really dealt a hammering yesterday evening, closing 1.99%, or 681 points, lower to post its worst performance since January. This following an unexpected-yet-unsurprising surge in inflation in April, to 4.2% at the annualised rate - more than double the Fed's target.
"And with the index set to drop a further 80 points this afternoon, the Dow is soon to find itself back at 33,500, mere days after crossing 35,000 for the first time.
"All this laid the scene for a gory European open. The FTSE, which was yesterday's frontrunner thanks to the UK's better-than-forecast GDP numbers, was hit by a sharp reversal from its commodity stocks."
In equity markets, Burberry shares tumbled after the luxury fashion brand reported a decline in full-year sales and operating profits, but took the decision to reinstate its dividend on the back of strong cash generation.
Hargreaves Lansdown was also under the cosh despite saying it achieved record new business in the first four months of 2021 as people invested savings amassed during the pandemic into the stock market.
BT retreated as the telecoms operator posted a 7% fall in revenue and a 6% fall in adjusted earnings for the year to end-March, reflecting the impact of Covid-19. It also said it was extending its full-fibre broadband network to 25m premises by the end of 2026, and would aim to fund the 5m extra premises through a joint venture.
Intertek managed to buck the trend after announcing the acquisition of SAI Global Assurance for AUD855mln (£470m).
Elementis was also in the black after the specialty chemicals company said its full-year performance was set to be towards the top end of consensus expectations amid an improvement in demand.
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