Economic news

UK Stocks Slip as Rate Hike, Inflation Fears Bite

  • FTSE 100 down 0.1%, FTSE 250 off 0.3%
  • Wizz Air falls on wider annual loss, Q1 operating loss forecast
  • Aveva down on weak outlook amid inflation woes

June 8 (Reuters) - London's blue-chip index slipped on Wednesday on worries that aggressive policy tightening by central banks will stifle global growth, while Wizz Air fell after the budget airline forecast a first-quarter operating loss.

The blue-chip FTSE 100 was down 0.1%, with banks among the biggest drags.

Financial stocks aren't proving resilient in the session as fears about how the slowdown will affect borrowing are making investors nervous, said Susannah Streeter, senior markets analyst at Hargreaves Lansdown.

There is also a "resurgence of concerns about rampant inflation and what effect aggressive policies aimed at curbing it could have on global growth."

Markets expect the European Central Bank on Thursday to lay the groundwork for rapid rate rises. Money markets ramped up bets on Wednesday to price in 75 basis points of hikes from the ECB by September. ECBWATCH

The U.S. Federal Reserve is also expected to raise its benchmark funds rate by 50 basis points next week and again in July, while for the Bank of England, markets are pricing in another 25-basis-point rate rise at the upcoming June meeting. BOEWATCH

The midcap FTSE 250 was down 0.3%.

The domestically focussed index is down more than 13% this year on fears about the economic toll from surging prices, while the blue-chip FTSE 100 has edged up 2.7%, buoyed by strong commodity prices.

The World Bank on Tuesday slashed its global growth forecast by nearly a third to 2.9% for 2022, warning that Russia's invasion of Ukraine has compounded the damage from the COVID-19 pandemic, and many countries now faced recession. 

Wizz Air fell 5.9% after the airline forecast an operating loss for the first quarter and reported a bigger annual loss due to staff shortages and supply snags. 

Aveva declined 2.6% after the industrial software firm flagged lower revenue growth in fiscal 2023 owing to inflationary pressures.

Reporting by Anisha Sircar in Bengaluru; Editing by Shailesh Kuber

Source: Reuters

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