9.39am: Commodity companies among biggest losers

The sell-off in the UK market is intensifying.

The FTSE 100 is now down 160.78 points or 2.3% at 6843.85 as it catches up with the inflation-driven falls on Wall Street.

There is just the one riser, energy group SSE PLC (LON:SSE), possibly on the grounds that it is a defensive stock. But it is not much of a defence: the shares are up just 6.5p or 0.45% at 1454p.

Neil Wilson at Markets.com said: “Another sell everything kind of day: A hot inflation print from the US has left stock markets around the world nursing losses…

” I would characterise this less as a rotation [out of growth stocks] than a capitulation with everything being offered.

“The FTSE 100 [is] trading about 300 points off Monday’s post-pandemic peak at 7,164 and at its lowest ebb since the first week of April. Stairs up, elevator down. Basic resources, energy and tech are the biggest fallers, with defensives utilities, healthcare and real estate down less, but still lower. The big miners and oil majors trade about 3-4% lower in early trade with oil easing off a two-month high.”

The market is not being helped by the fact that oil heavyweight Royal Dutch Shell PLC (LON:RDSA), down 3.95% or 55.8p at 1357.2p, has gone ex-dividend.

Anglo American PLC (LON:AAL) has lost 4.48% to 3248.5p while Rio Tinto PLC (LON:RIO) has dropped 4.32% to 6291p.

Nor is there much support from company results. Both Burberry PLC (LON:BRBY), down 7.94% at 1937p, and BT Group PLC (LON:BT.A), 3.88% at 162.5p, are out of favour following their latest updates.

8.43am: Inflation fears hit UK market

The FTSE 100 opened sharply lower after a bruising session on Wall Street – one which saw the Dow Jones tank 688 points, or 2%.

Haunting international markets was the spectre of inflation, which was far more real than imagined as a runaway economic recovery in the US saw consumer prices jump by a worse than expected 4.2% April.

The worry is the Federal Reserve will intervene, signalling the end of the ultra-easy monetary policy that has fuelled spending on equities, particularly shares in the tech sector.

Reflecting those concerns, the Nasdaq Composite was closed down 2.7%. The Footsie had shut up shop before the real fun began.

Still, it made for a wobbly start on Thursday. Topping the fallers was Burberry (LONL:BRBY), which dropped 8% after the fashion group’s prelims. Traders focused on the negative – margin pressure – rather than the positives, including a resumption of the dividend and the revival of key Asian markets.

“A weak wider market and some elements of profit-taking have made for an ugly start for the shares in response to the results,” said Richard Hunter, head of markets at Interactive Investor.

“While this update will reassure bulls of the stock, given the recent strength of the price-performance, the shares are seen as being up with events for now, with the market consensus coming in at a hold.”

BT Group (LON:BT.A) fell 5% after it said it would be spending heavily to accelerate its fibre roll-out.

6.50 am: Wall Street wobble expected to shake the Footsie 

The FTSE 100 is set to start Thursday on the backfoot after American equities again suffered a bloody nose.

CFD and spreadbetting firm IG Markets sees London’s blue-chip benchmark down around 60 points, making a price of 6,942 to 6,945 with just over an hour to go until the open.

After stocks dropped earlier this week on the sentiments and indirect indicators of inflation this latest sell-off was preceded by a spike in the US consumer price index (CPI), which jumped to its biggest increase for nearly fifteen years.

New York’s Dow Jones fell 681 points or 1.99% on Wednesday to close at 33,587 whilst the S&P 500 similarly dropped 2.14% down to 4,063.

The Nasdaq gave up 357 points or 2.67% to finish Wednesday’s trading at 13,031.

Small Cap focussed Russell 2000 index fell further still, losing 3.26% to end the day at 2,135.

“Federal Reserve vice chair Richard Clarida expressed some surprise at how big the jump was in yesterday’s inflation numbers, but still insisted that the moves higher in prices were transitory in nature,” said Michael Hewson, analyst at CMC Markets.

“Fears about overheating seem somewhat premature at this time given the disruption wrought by the pandemic and the price disruptions of the past 12 months. There is no question we’ve seen some big gains in commodity prices over the past 12 months.”

He added: “While concerns about inflation are continuing to dominate investor concerns, there is unlikely to be any respite with the latest US PPI numbers for April due to be released this afternoon.”

Producer price index (PPI) readings are typically leading indicators for consumer prices, as the rise in ‘factory gate’ pricing tends to be passed straight down to the consumer further down the supply chain – so its possible that the stock market volatility triggered by inflation won’t abate just yet.

In Asia, Japan’s Nikkei shed 600 points or 2.13% to change hands at 27,548 and Hong Kong’s Hang Seng dropped 1.29% to 27,865. The Shanghai Composite index lost just over 1% to 3,426.

Around the markets

The pound: US$1.4063, up 0.06%

Gold: US$1,817 per ounce, down 0.02%

Silver: US$27.02 per ounce, down 0.4%

Brent crude: US$68.57 per barrel, up 0.02%

WTI crude: US$65.33 per barrel, up 0.07%

Bitcoin: US$51,077, down 11%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were lower on Thursday after Wall Street fell sharply on Wednesday following higher-than-expected inflation data triggering fears of an interest rate hike.

The Hang Seng index in Hong Kong fell 1.24% while the Shanghai Composite in China slipped 1.06%.

In Japan, the Nikkei 225 dipped 2.42% and South Korea’s Kospi fell 1.21%.

Shares in Australia declined, with the S&P/ASX 200 trading 0.75% lower.

Proactive Australia news:

Netlinkz Ltd (ASX:NET) has raised $1.7 million in an institutional entitlement offer, with strong support from new and existing institutional shareholders.

Torian Resources Ltd (ASX:TNR) has discovered a new gold mineralised zone from surface at the Mt Stirling Gold Project near Leonora in Western Australia.

Blackstone Minerals Ltd (ASX:BSX) (OTCMKTS:BLSTF) (FRA:B9S) has delivered further massive sulphide vein (MSV) nickel results from drilling at Ta Khoa Nickel-Copper-PGE Project in Vietnam.

Predictive Discovery Ltd (ASX:PDI) has enhanced the regional prospectivity of Bankan Gold Project in Guinea with new auger drilling results from Argo Regional Target AG1 returning 12 metres at 9.84 g/t gold from 4 metres and 16 metres at 2.02 g/t from 4 metres.

Alto Metals Ltd (ASX:AME) is trading higher after intersecting the highest grade ever reported from the Vanguard prospect of Sandstone Gold Project in Western Australia with a result of 4 metres at 60.6 g/t from 40 metres.

Rimfire Pacific Mining NL (ASX:RIM) has received strong validation of the golden potential of Sorpresa development project in central NSW with partner Golden Plains Resources (GPR) confirming that it will continue into the second year of an earn-in.

Firefinch Ltd (ASX:FFX) (FRA:N9F) (OTCMKTS:EEYMF) has started open pit mining at Morila Pit 5 within the wider Morila Gold Project in Mali where contractor EGTF has mobilised a new 100-tonne class fleet.

Arafura Resources Ltd (ASX:ARU) (OTCMKTS:ARAFF) (FRA:REB) is encouraged by the strong support being demonstrated by the Australian Federal Government for the Nolans Neodymium-Praseodymium (Nd-Pr) Project in the Northern Territory.

Brookside Energy Ltd (ASX:BRK) (OTCMKTS:RDFEF) has commenced trading on the Frankfurt Stock Exchange (FSE) under the ticker (FRA:8F3).

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