London Shares Slightly Lower as Oil Surge Sparks Inflation Fears
Market Overview and Key Drivers
Sept 8 (Reuters) - London's benchmark FTSE 100 was little changed on Tuesday as oil prices hit multi-week highs and dampened risk appetite in a week packed with economic data, while gains in energy stocks limited broader declines.
The blue-chip FTSE 100 index fell 0.6% to 10,816.59 points by 1022 GMT, while the mid-cap FTSE 250 slipped 0.24%.
Oil Prices and Geopolitical Tensions
• Yemen's Tehran-backed Houthis attacked energy facilities in Saudi Arabia, in a major expansion of the ongoing conflict, sending Brent crude to near $99 a barrel.
Impact on Energy Stocks
• Energy stocks in London rose, with BP and Shell up 1.5% and 0.7%, respectively. [O/R]
Inflation and Interest Rate Expectations
• Rising oil prices have reinforced inflation concerns, pushing global bond yields to multi-month highs last week. Stocks took a beating and markets reassessed interest rate hike expectations.
• Traders are pricing in a 60% chance of a U.S. rate hike next week, while they expect the Bank of England to remain on hold, according to LSEG data.
• A key U.S. inflation report this week and economic growth data in the UK could influence these bets heading into next week.
Sector Performance
Banking and Consumer Sectors
• Heavyweight banks fell 0.8%, the biggest weights in the market.
• Consumer-focused sectors took a hit on Tuesday. Dunelm tumbled 12.5% after the homeware retailer issued a profit warning for 2027, citing hot summer weather.
Retail and Personal Goods
• The stock was the biggest loser on the mid-cap index, and weighed down the retailers sector, which lost 0.9%.
• Personal goods also lost 1.5% after data showed British retail sales growth slowed to a four-month low in August.
Mining and Technology
• Miners Antofagasta and Glencore gained 3.6% and 1.2% after copper prices hit a record high. The industrial metal miners sector gained 1%.[MET/L]
• Among others, Computacenter bottomed the FTSE 100 with a 3.8% fall. The technology service provider hit a record high earlier in the session after it said annual profit would top market expectations.
Other Developments
• Separately, British retailers said that they would seek to create 100,000 jobs for young people not in employment or education by the time of the next national election due in 2029.
(Reporting by Anand Gopal and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)
