Economic reports showing stubborn inflation in the US and an anaemic economy in the UK were sending London shares and the pound lower on Thursday.

With heavyweight mining shares faltering, the FTSE 100 stock index now is down more than 4% in 2022 so far, while sterling is back to a level not seen since the height of the virus pandemic.

‘The FTSE 100 tumbled after weak UK GDP numbers and higher than expected US inflation figures stoked fears about a global economic slowdown. Investors were quick to dump commodity producers on the grounds that demand could fall in the coming months,’ said Russ Mould, investment director at AJ Bell.

The FTSE 100 index was down 173.42 points, or 2.4%, at 7,174.24 midday Thursday. The mid-cap FTSE 250 index was down 362.80 points, or 1.9%, at 7,174.24. The AIM All-Share index was down 19.97 points, or 2.1%, at 933.93.

The Cboe UK 100 index was down 2.3% at 715.25. The Cboe 250 was down 1.8% at 16,991.12, and the Cboe Small Companies down 0.6% at 14,541.78.

Blue-chip miners were bearing the brunt of the sell-off on Thursday. Fresnillo was down 7.0%, Glencore 6.8%, Anglo American 6.1%, and Antofagasta 6.0%. Rio Tinto was down 5.5%, also suffering from a broker rating cut, with Deutsche Bank dropping the diversified miner to 'hold' from 'buy'.

In the 250s, Ferrexpo was down 7.4% and Hochschild 6.7%.

AJ Bell's Mould added: ‘Tech-heavy Scottish Mortgage Investment Trust was beaten up as investors feared portfolio company valuations would be worth less based on discounted cash flow models because of rising interest rates. Once seen as a superstar vehicle for the world's next big things in the world of business, Scottish Mortgage has lost its shine big time. Its share price is down 43% year-to-date and has more than halved in value since last November's peak.’

It was down 6.7% around midday on Thursday.

The overhanging cloud on Thursday was the news the UK economy ground to a halt over the course of the first three months of 2022, preliminary data from the Office of National Statistics showed.

For the first quarter of 2022, UK gross domestic product is estimated to have increased 0.8% versus the immediately previous quarter, which is behind market consensus - according to FXStreet - of 1.0% quarter-on-quarter expansion.

In the final quarter of 2021, the GDP grew by 1.0% on quarterly basis.

Economic performance deteriorated during the course of the first three months of this year. Monthly estimates show that GDP rose by 0.7% in January, followed by no growth in February 2022 and a fall of 0.1% in March 2022.

Sterling tumbled after the early morning data release.

The pound was quoted at $1.2210 midday Thursday, down from $1.2323 at the London equities close on Wednesday. Sterling fell as low as $1.2188 after the GDP data, a level not seen since May 2020.

In Paris, the CAC 40 stock index was down 2.4% in early afternoon trade, while the DAX 40 in Frankfurt was 2.1% lower.

In London, JD Sports was among the few green shoots on the FTSE 100, up 2.5%, as its sales have grown in the early weeks of its financial year, shaking off supply chain pressures.

In addition, JD Sports lifted profit guidance for its financial year that ended on January 29. It expects headline pretax profit, before exceptional items, to be £940 million. This guidance is raised from ‘at least £900 million’ previously. It would be more than double the £421.3 million achieved in financial 2021.

For the year ending January 28, 2023, JD Sports expects headline pretax profit to be ‘at least equal’ to the financial 2022 result.

The athleisure retailer has seen a ‘global shortfall in the supply of certain key footwear styles’. Though it expects this situation to ‘improve progressively’ as the year continues.

In the 14 weeks to May 7, JD Sports said like-for-like sales rose 5% year-on-year.

Coca-Cola HBC was 2.4% higher as its revenue surged in the first quarter of 2022.

The soft drink bottler also said it expects to have a ‘much smaller presence’ in Russia in the wake of the Kremlin's invasion of Ukraine. Zug, Switzerland-based Coca-Cola HBC is evaluating its options in Russia, after the US's Coca Cola Co suspended business there and stopped taking orders for concentrate from March 8.

‘Following this decision, we will have a much smaller presence in the market focused on local brands. We are evaluating all options here and will share more in due course, alongside the financial implications of any decision made for both 2022 performance and the level of non-cash charges,’ Coca-Cola HBC said.

The FTSE 100 constituent recorded strong growth in the first quarter, with organic revenue - minus its Russian and Ukrainian operations - surging 26%.

In the three months to March 31, the bottling partner of Coca-Cola Co reported group revenue growth of 31% to €1.77 billion from €1.35 billion, with established markets up 20%, developing up 40%, and emerging up 36%.

Group volume was up 23% in the first quarter to 605.5 million cases from 490.8 million the year prior.

In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.8%. In China, the Shanghai Composite ended 0.1% lower, while the Hang Seng index in Hong Kong closed down 2.2%. The S&P/ASX 200 in Sydney ended down 1.8%.

The picture does not look any prettier in the US, with all three major benchmarks on Wall Street set to fall at the open. The Dow Jones Industrial Average is called down 0.6%, the S&P 500 down 0.7%, and the tech-heavy Nasdaq Composite is seen opening down 1.1%.

US Investors were continuing to digest Wednesday's hot US inflation print.

‘While yesterday's report was scrutinized for signs of peak inflation, more importantly it provided evidence of persistent inflation,’ said Rabobank.

Investors will also be keenly awaiting the US producer prices report, due before the New York open at 1330 BST.

Brent oil was quoted at $105.46 a barrel midday Thursday, down sharply from $107.27 late Wednesday. Gold stood at $1.849.70 an ounce, marginally higher from $1,849.37.

The euro, at $1.0433, was sitting at a low level not seen since early 2017. It was sharply lower against $1.0540 late Wednesday. Against the yen, the dollar was trading at JP¥128.75, down significantly from JP¥130.23.

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Issue Date: 12 May 2022