It has been an extremely difficult week for stocks in London after much higher than expected US inflation figures were released ahead of the US open, prompting immediate concern over new central bank policies and consumer confidence.
US inflation hit a new four-decade high in May, triggering an almost instant selloff in US index futures. These numbers are a worrying trend and put additional pressure on families as prices to buy essentials like food and fuel rise dramatically.
Investors are very concerned about inflation. This was true even before today’s US CPI number, which was not helped by comments from the ECB.
The Federal Reserve is expected to accelerate aggressive monetary policy tightening following this inflation report. That will be ahead of next week’s interest rate decision from the US central bank. The Fed’s first more than 50 basis point hike since May 2000 was implemented last month, and many expect further hikes in the coming months.
The FTSE 100, mid-cap and small-cap markets such as AIM were also hit hard. Many companies on the main London stock market have seen their value decline by almost 30% since the outbreak of war in Ukraine.
Tech companies have suffered the most. Companies with earnings further into the future will suffer more from rising interest rates, such as technology companies.
Anglo American, CRH and Melrose Industries were 3 of the biggest fallers, but they weren’t the only ones as most of the top 100 came under pressure.
About Pete Southern
Pete Southern is an active trader, chartist and writer for market blogs. He is currently a technical analysis contributor and administrator of this blog here.