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London stocks slide after three-day rally; Tesco falls on forecast cut
Global Banking & Finance Review®
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By Johann M Cherian
(Reuters) – UK shares snapped a three-session winning streak on Wednesday, dragged down by financials and miners, while Tesco’s profit forecast fanned worries of a worsening cost-of-living crisis in Britain and rattled the retail sector.
The export-oriented FTSE 100 was off 1.1%, while the more domestically oriented FTSE 250 was down 1.3% by 8:48 GMT.
Weighing the most on the FTSE 100 was the financial sector, which slipped 2%, while healthcare stocks dropped 0.7%.
“Investors are just taking a pause and thinking about, expectations about the Fed and other central banks,” said Daniela Hathorn, market analyst at Capital.com.
“The focus on the Bank of England is going to be how are they actually implementing longer term measures to combat inflation without hindering growth. There’s a lot of pressure on the BoE as people still think that it’s coming in short in terms of their measures.”
Data for September showed British businesses suffered the sharpest contraction in activity since early last year, although the downturn was a little less severe than previously anticipated.
Risk assets have taken a hit this year as central banks globally undertake monetary tightening to tame surging inflation.
Among individual stocks, Tesco fell 2.3% after Britain’s biggest retailer forecast full-year profit at the lower end of its previous estimate. The wider retailer sector slipped 2.3% on the news.
Mining stocks were down 1.6%, while oil majors BP and Shell dipped more than 1% each after rallying sharply in last few sessions.[MET/L][O/R]
After a week of volatility that saw the reversal of controversial tax cuts proposed by the government, British Prime Minister Liz Truss will argue on Wednesday that disruption sparked by her economic plans will be worth it in the long run.
(Reporting by Johann M Cherian in Bengaluru; Editing by Sherry Jacob-Phillips and Anil D’Silva)
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, based on market capitalization.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
Risk assets are investments that carry a higher risk of loss but also have the potential for higher returns, such as stocks and commodities.
Monetary tightening refers to the process by which a central bank increases interest rates or reduces the money supply to control inflation.
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