London’s FTSE 100 index fell to its lowest level in a month on Monday, led by weakness in heavyweight mining and travel stocks, with investors weighing inflation concerns ahead of economic data and Bank of England’s rate decision later in the week.
The blue-chip index dropped 0.8 per cent to its lowest since May 19th. Travel stocks fell the most, down nearly 7.5 per cent, while miners declined 1.7 per cent.
Data last week showed Britain’s inflation surged past its central bank’s target in May, compared with the previous year, raising concerns that the Bank of England could pull back its monetary support later this week.
Britain’s top central bank officials look set to remain divided this week over whether to pull the plug on their £875 billion ($1.2 trillion) government bond purchase programme.
The domestically focussed mid-cap index fell 0.5 per cent
Among stocks, supermarket chain Morrisons surged 29.8 per cent as US private equity firm Clayton, Dubilier & Rice is set to push ahead with its takeover pursuit.
Outsourcer Capita gained 0.4 per cent after it said it was on track to post revenue growth for the first time in six years and agreed to sell its 51 per cent stake in Axelos, a joint venture with the UK Cabinet Office.
Europe
European shares fell as mining and bank stocks bore the brunt of a surprise shift in the US Federal Reserve’s stance on monetary policy last week.
The pan-European Stoxx 600 index was down 0.6 per cent at a more-than-two-week low by 7.04am GMT.
The index snapped a four-week winning streak on Friday after the Fed signalled it could raise interest rates much sooner than expected.
Mining stocks fell 1.7 per cent to track a slump in metals prices, while banking shares lost 1.3 per cent as investors booked profits after a run that has lifted them more than 20 per cent this year.
Focus later in the day will be on a speech by European Central Bank president Christine Lagarde to the European Parliament.
In company news, Italian-American vehicle maker CNH Industrial slipped 1.3 per cent after agreeing to a deal to buy Raven Industries at an enterprise value of $2.1 billion.
Asia
Asian stocks also dropped after last week’s shift by the US Federal Reserve reduced the allure of riskier assets, while the Treasury yield curve flattened further with 30-year yields dropping below 2 per cent.
Japan’s Nikkei led declines with a 3.6 per cent drop and dipped below 28,000 for the first time in a month, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.4 per cent. Chinese blue chips lost 0.7 per cent.
Benchmark 10-year US Treasury yields fell to the lowest since February 24th at 1.3540 per cent, while those on 30-year bonds slid as low as 1.9290 per cent for the first time since February 11th.
The yield curve – measured by the spread between two- and 30-year yields – was the flattest since late January as investors brought forward rate hike expectations while lowering the longer-term outlook for growth and inflation.
The US dollar hovered near the 10-week high touched on Friday versus major peers, following its biggest weekly advance in more than a year.
The MSCI world equity index, which tracks shares in 45 nations, fell another 0.3 per cent on Monday, extending its retreat from a record intraday high reached Tuesday.
Currencies
US stock futures pointed to further selling when Wall Street reopens, easing 0.4 per cent after Friday’s 1.3 per cent slide in the S&P 500.
Several Fed officials have speaking duties this week, including chair Jerome Powell, who testifies before Congress on Tuesday.
The euro traded near the lowest since April 6th at $1.1863 on Monday, dropping from as high as $1.21457 last Tuesday.
Sterling continue to take a beating, falling as low as $1.37865 for the first time since April 16th.
Commodity-linked currencies have also suffered, with the Australian dollar hovering near a six-month low at $0.7492.
A stronger greenback has pressured cryptocurrencies too, with bitcoin falling 4.2 per cent to around $34,112, while smaller rival ether lost 5.7 per cent to around $2,115.
In commodities, gold rebounded 0.6 per cent to $1,773.12 an ounce on Monday, looking to snap a six-day losing streak, but still remained near the lowest since early May.
Three-month copper on the London Metal Exchange fell to its lowest since April 15th, following an 8.6 per cent drop last week, the biggest weekly fall since March 2020.
Crude oil rose for a second day, underpinned by strong demand during the summer driving season and a pause in talks to revive the Iran nuclear deal that could indicate a delay in resumption of supplies from the OPEC producer.
Brent crude futures rose 22 cents to $73.73 a barrel, while US West Texas Intermediate crude rose 28 cents to $71.92 a barrel. – Reuters
