FTSE 100 registers monthly decline as oil rally heightens inflation concerns

FTSE 100 Suffers Monthly Loss as Oil Rally Fuels Persistent Inflation Worries

Market Performance and Key Drivers

FTSE 100 and FTSE 250 Index Movements

Sept 30 (Reuters) - London's FTSE 100 fell on Wednesday and posted a monthly loss as persistent inflation concerns and rising bond yields dampened investor sentiment.

The blue-chip FTSE 100 index closed 0.29% lower at 10,606 points, registering its biggest monthly loss since March, though notching a seventh consecutive quarterly gain. 

The midcap FTSE 250 climbed 0.68% but dipped for the month.

Sector Performance and Influences

• Oil prices: Oil prices rose with Brent crude above $103 a barrel, reinforcing inflation concerns and boosting expectations that interest rates could remain higher for a longer period
• Banks and pharma: Heavyweight banks and pharma stocks were the biggest drags in the blue-chip index, declining 0.7% and 1% respectively
• Telecom: Telecom stocks also dropped, with Airtel Africa shedding 3.3%
• Bonds: Global bonds inched higher, with the yield on the British benchmark 10-year gilt hovering near two-decade highs

Interest Rate Outlook and Central Bank Actions

• Reflecting rate tightening across central banks globally, traders are pricing in at least one 25-basis-point rate hike by the Bank of England this year, according to data compiled by LSEG
• BoE policymaker Alan Taylor said it was unclear that it would be practical for the BoE to do a single rate hike to tame inflation without fuelling unwarranted market speculation of further increases

Positive Movers and Economic Data

• Limiting losses, the utilities sector rose 1.7% a day after British PM Andy Burnham made a series of policy announcements for the sector
• On the data front, Britain's economy grew more quickly than previously thought in the second quarter, with output expanding by 0.5% in the April-to-June period, the Office for National Statistics said
• Among other stocks, Greggs advanced 8.2% after the fast-food chain raised its annual profit outlook as underlying sales growth accelerated in the third quarter
• Holiday and insurance group Saga surged 22.8% to a near seven-year high after forecasting materially higher annual profit

Reporting and Editorial

(Reporting by Anand Gopal in Bengaluru; Editing by Mrigank Dhaniwala and Alex Richardson)