At 0840 BST, the FTSE 100 was down 0.5% at 6,959.32, while the pound was up 0.2% against the dollar at 1.1103.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown (LON:HRGV), said: “’October’s early optimism has evaporated and pessimistic sentiment has returned about the after-effects on the global economy of the big offensive on inflation. Stocks in Asia retreated, following in Wall Street’s footsteps after US indices on Friday fell back amid expectations the Federal Reserve will continue to ramp up interest rates following a buoyant jobs report.
“This weakness across equities is expected to persist through the trading sessions to come, with the FTSE 100 has also opened lower amid worries that as the era of cheap money disappears so fast, economies are heading for a hard landing. Nervousness is set to persist ahead of key data in the UK and the US on consumer and producer prices later this week and investors will be hanging on any indications about the Fed’s future moves from the minutes of the Federal Open Market Committee which are due to be released on Wednesday.”
Investors will also be eyeing the start of the US earnings season, which kicks off on Friday with the big banks.
On home shores, meanwhile, the Bank of England announced three additional measures earlier to support an “orderly end” to its emergency bond-buying scheme. The Bank said it will increase the maximum auction size to up to £10bn per day from £5bn.
It will also launch a Temporary Expanded Collateral Repo Facility (TECRF), which will enable banks to help to ease liquidity pressures facing their client LDI (liability-driven investment) funds through liquidity insurance operations, which will run beyond the end of this week.
Finally, the BoE said it “stands ready” to help the LDI pension industry through its regular Indexed Long Term Repo operations.
In equity markets, energy firms SSE (LON:SSE) and Centrica (LON:CNA) were under the cosh. Airlines were also under pressure, with BA and Iberia parent IAG, Wizz Air (LON:WIZZ) and EasyJet (LON:EZJ) all down.
National Grid (LON:NG) fell as it said trading for the first half of its fiscal year was in line with expectations and forecast annual underlying earnings to be more marginally weighted to the second half than usual after including a full six-month contribution of National Grid Electricity Distribution (formerly Western Power Distribution).
Elsewhere, RS Group – formerly Electrocomponents (LON:RS1R) – was knocked lower by a downgrade to ‘neutral’ at JPMorgan (NYSE:JPM).
On the upside, paper and packaging group DS Smith surged to the top of the FTSE 100 after saying its performance for the full year was set to be ahead of expectations. Peers Smurfit Kappa and Mondi (LON:MNDI) also racked up healthy gains.
Unite Group (LON:UTG) was trading up after the student accommodation provider said full-year earnings were on track to come in at the top end of expectations as student numbers continue to grow.
Moneysupermarket (LON:MONY) jumped to the top of the FTSE 250 after a rating upgrade by RBC Capital Markets.
Market Movers
FTSE 100 (UKX) 6,959.32 -0.45%
FTSE 250 (MCX) 17,215.39 -0.79%
techMARK (TASX) 4,126.95 -0.80%
FTSE 100 – Risers
Smith (DS) (SMDS) 261.00p 7.94%
Unite Group (UTG) 821.00p 3.21%
Smurfit Kappa Group (CDI) (SKG) 2,518.00p 2.69%
Mondi (MNDI) 1,375.00p 1.59%
Tesco (LON:TSCO) 202.60p 0.95%
M&G (MNG) 166.85p 0.63%
Sainsbury (J) (SBRY) 171.10p 0.56%
Legal & General Group (LGEN) 223.00p 0.54%
Auto Trader Group (AUTO) 526.40p 0.53%
Shell (LON:RDSa) (SHEL) 2,357.50p 0.51%
FTSE 100 – Fallers
Centrica (CNA) 68.62p -3.27%
SSE (SSE) 1,451.00p -3.23%
Fresnillo (LON:FRES) 768.60p -2.41%
International Consolidated Airlines Group (LON:ICAG) SA (CDI) (IAG) 98.93p -2.26%
RS Group (RS1) 958.00p -2.19%
Flutter Entertainment (CDI) (FLTR) 10,105.00p -2.04%
Burberry Group (LON:BRBY) 1,863.00p -1.95%
AstraZeneca (NASDAQ:AZN) 9,847.00p -1.82%
Haleon (HLN) 274.40p -1.75%
Diageo (LON:DGE) 3,680.50p -1.42%
FTSE 250 – Risers
Moneysupermarket.com Group (MONY) 187.00p 3.54%
Discoverie Group (DSCV) 681.00p 2.56%
Bridgepoint Group (Reg S) (BPT) 201.20p 2.34%
Ferrexpo (FXPO) 128.00p 1.59%
Volution Group (FAN) 314.00p 1.45%
Synthomer (SYNT) 101.50p 1.40%
Diversified Energy Company (DEC) 136.90p 1.26%
Henderson Smaller Companies Inv Trust (HSL) 739.00p 0.82%
Law Debenture Corp . (LON:LWDB) 684.00p 0.59%
Investec (INVP) 394.40p 0.59%
FTSE 250 – Fallers
Wizz Air Holdings (WIZZ) 1,356.00p -5.01%
Drax Group (LON:DRX) 533.50p -4.73%
Helios Towers (HTWS) 103.50p -4.70%
Aston Martin Lagonda Global Holdings (AML) 92.08p -4.34%
Dr. Martens (DOCS) 213.00p -3.79%
Premier Foods (PFD) 93.40p -3.51%
easyJet (EZJ) 284.60p -3.33%
Genus (LON:GNS) 2,452.00p -3.24%
TUI (LON:TUIT) AG Reg Shs (DI) (TUI) 108.05p -3.14%
888 Holdings (DI) (LON:888) 93.75p -3.10%
Source: UK Investing
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