Stock prices in London closed sharply lower on Wednesday, as Brent crude surged above 100 dollars a barrel and heightened inflation fears weighed on global equities.
The FTSE 100 index closed down 141.60 points, 1.3%, at 10,670.06. The FTSE 250 ended down 240.19 points, 1.0%, at 24,108.66, and the AIM all-share closed down 0.50 points, 0.1%, at 796.25.
The pound was quoted at 1.3554 dollars at the time of the London equities close on Wednesday, up from 1.3548 dollars on Tuesday. Against the euro, sterling edged up to 1.1644 euros from 1.1643 euros a day prior. The euro stood at 1.1639 dollars, up from 1.1631 dollars.
Against the yen, the dollar was trading at 153.24 yen on Wednesday, down from 154.18 yen on Tuesday.
Brent oil was quoted at 101.07 dollars a barrel at the time of the London equities close on Wednesday, up from 98.00 dollars late Tuesday afternoon.
Brent oil climbed above 100 dollars a barrel for the first time since July after the US military reported striking five Iranian oil tankers, adding to a sharp rise in global crude oil and natural gas prices.
The latest escalation followed retaliatory threats from Iran and a wave of missile and drone attacks by Iran-aligned Houthi militants on several Saudi Aramco energy facilities, fuelling fresh concerns about global energy supplies.
The US-Iran conflict is now in its seventh month and shows little sign of easing, despite White House claims that a deal is imminent. Investors are becoming increasingly concerned that soaring energy costs could force the Federal Reserve to raise interest rates to contain renewed inflationary pressures.
Washington and Tehran remain locked in a stalemate. Iran continues to maintain a stranglehold on the Strait of Hormuz, a crucial shipping route for the world’s oil and gas, while the US is pursuing a campaign aimed at choking the Islamic Republic’s ports and economy.
Surging energy costs have kept inflation elevated globally and increased pressure on central banks to raise borrowing costs, with the European Central Bank widely expected to hike interest rates on Thursday.
Attention will then turn to Friday’s US consumer price index report, which is seen as crucial to determining whether the Federal Reserve raises interest rates next week.
Back in London, oil majors benefited from the rally in crude prices, with BP topping the FTSE 100, up 1.3%, while Shell climbed 0.1%.
Technology services provider Computacenter reversed some of Tuesday’s losses, when it closed down 9.0%, rising 0.5% on Wednesday.
Autotrader Group was among the worst performers on the blue-chip index, down 4.7%, while Burberry fell 4.0% after HSBC cut the luxury retailer to ‘hold’ with a 1,200p price target.
On the FTSE 250, NCC Group fell 6.7%, while Funding Circle Holdings closed down 6.1%, extending Tuesday’s losses following news that chief executive Lisa Jacobs will leave the company in 2027.
Goodwin shares also extended Tuesday’s losses, down 3.5%, as the mechanical and refractory engineering company confirmed the sale of a substantial part of its Mechanical Engineering division to an affiliate of New York-based Cerberus Capital for up to £1.10 billion.
Among smaller caps, Sutton Harbour jumped 38%, while Caledonian Holdings surged 20% after the investing company’s wholly owned subsidiary, Aspire Commerce, sealed the commercial launch of its enhanced multi-currency business current account offering, a “key commercial milestone”.
Mortgage Advice Bureau shares lost 20% after the mortgage advice provider lowered its full-year guidance, citing a weaker housing market and fewer potential customers entering its Fluent division.
In European equities on Wednesday, the CAC 40 in Paris closed down 1.9%, while the DAX 40 in Frankfurt ended down 1.7%.
The European Union on Wednesday proposed new rules to encourage member states to favour domestic companies over Chinese bidders for government contracts.
The reform forms part of efforts to support European companies and bolster the bloc’s key industries against competition from China and the US.
Public procurement is worth 2.60 trillion euros a year in the EU, equivalent to around 15% of the bloc’s economic output. Of that total, around 600 billion euros in public contracts are put out to tender across the EU each year.
Stocks in New York were lower. The Dow Jones Industrial Average was down 0.8%, the S&P 500 index down 0.5%, and the Nasdaq Composite down 0.7%.
The yield on the US 10-year Treasury was quoted at 4.81%, widening from 4.80%. The yield on the US 30-year Treasury was quoted at 5.26%, widening from 5.25%.
Meanwhile, US private employers added an average of 12,000 jobs per week in the four weeks to August 22, preliminary figures from payroll processor ADP showed on Wednesday.
The latest reading from the ADP National Employment Report Pulse accelerated from an average of 10,000 jobs per week in the four weeks to August 15.
The four-week moving average stood at 11,750 jobs for the period to August 8 and 9,500 for the period to August 1.
However, the pace of hiring remained well below levels recorded earlier in the summer. The four-week average stood at 30,750 jobs per week in the period to June 6, before falling to 24,250 on June 13, 21,000 on June 20 and 19,750 on June 27.
Gold was quoted at 4,420.33 dollars an ounce late Wednesday, down from 4,494.00 dollars on Tuesday afternoon.
The biggest risers on the FTSE 100 were BP, up 7.00p at 557.10p, IG Group, up 14.00p at 1,354.00p, Computacenter, up 25.00p at 5,190.00p, Pearson, up 5.50p at 1,166.50p and Aberdeen Group, up 1.00p at 248.60p.
The biggest fallers on the FTSE 100 were Autotrader Group, down 24.00p at 489.00p, Burberry Group, down 43.00p at 1,035.00p, Melrose Industries, down 17.20p at 481.30p, Sage Group, down 34.90p at 983.60p and 3i Group, down 88.00p at 2,701.00p.
On Thursday’s economic calendar are the UK Rics house price balance, Australian inflation expectations, German consumer price inflation, Spanish industrial production and Irish consumer price inflation.
Also due are the eurozone interest rate decision, US producer price inflation, weekly US jobless claims, existing home sales and wholesale inventories.
On Thursday’s UK corporate calendar, Associated British Foods and Currys issue trading statements, while Fevertree Drinks, Oakley Capital Investments and RTW Biotech Opportunities report half-year results.
Contributed by Alliance News
