London close: Tesco leads the decline as hawkish BoE spooks markets

A record loss from the UK's largest retailer and hawkish comments from the Bank of England combined to push stocks in London lower on Wednesday.

The FTSE 100 finished the session down 0.49% at 7,028.24, pulling back after rising to a high of 7,092.34 early on. The index came close to its intraday high of 7,119.35 reached last week.

Tesco was leading the blue-chip index lower after reporting its steepest annual loss in the supermarket's 97-year history, spreading weakness across the wider retail sector. Financial stocks were also out of favour.

Minutes from the Bank of England's meeting earlier this month also caused some concern among investors. While the decision to hold interest rates was unanimous, as expected, policymakers did highlight that recent moves in sterling could raise inflation sooner than expected.

"This pushes rate hike expectations forward and shows that central bankers are possibly willing to somewhat overlook the influence the oil price is having on inflation levels," said IG analyst Joshua Mahony.

Economic data was relatively thin on the ground on Wednesday, though figures did show that Eurozone consumer confidence declined in April as uncertainty surrounding Greece hit sentiment. Meanwhile, US existing home sales rose at their fastest pace in 18 months in March.

Tesco under the spotlight

Tesco jumped in early deals after its results, though the swift realisation that a £6.4bn annual loss was not something to be taken lightly saw its share price drop over 5% by the close.

"To say that Tesco had a nightmare year in FY2015 would be an understatement, an out-turn that would simply have been unfathomable in days gone by," Shore Capital's Clive Black and Darren Shirley said.

The results took out grocery rivals Sainsbury's and Morrisons too, who were both nursing losses of around 4% by the end of trading, while other retailers such as Sports Direct, M&S and Next all weakened.

Stocks in the financial sector were also weighing on the market, including Hargreaves Lansdown after being downgraded to 'hold' by Jefferies. Schroders, Prudential, Legal & General, Lloyds and HSBC also fell.

Meanwhile, Credit Suisse lowered its target price on Standard Chartered from 880p to 850p and kept an 'underperform' rating, saying the company is "prioritising building capital by holding back growth".

Among the risers was engine maker Rolls-Royce after chief executive John Rishton announced plans to retire this summer. He will be succeeded by former ARM Holdings boss Warren East.

UK timber and builders merchant Travis Perkins also advanced after saying group sales were up 7.2% in the first quarter despite strong comparators with last year.

Shares in BHP Billiton gained after revealing record levels of iron ore and coal production for the nine months of its financial year. The miner however also announced it would postpone some plans to increase an iron ore project.

Market Movers
techMARK 3,236.91 +0.02%
FTSE 100 7,028.24 -0.49%
FTSE 250 17,635.55 -0.43%

FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 1,048.00p +4.07%
Travis Perkins (TPK) 2,074.00p +2.72%
Rio Tinto (RIO) 2,863.50p +1.83%
Hikma Pharmaceuticals (HIK) 2,135.00p +1.81%
BHP Billiton (BLT) 1,483.00p +1.37%
Shire Plc (SHP) 5,645.00p +1.26%
Associated British Foods (ABF) 2,745.00p +1.22%
G4S (GFS) 304.00p +0.93%
BT Group (BT.A) 460.55p +0.81%
Aggreko (AGK) 1,672.00p +0.72%

FTSE 100 - Fallers
Tesco (TSCO) 222.65p -5.15%
Morrison (Wm) Supermarkets (MRW) 190.40p -4.08%
Sainsbury (J) (SBRY) 263.00p -3.73%
Sports Direct International (SPD) 631.00p -3.37%
Hargreaves Lansdown (HL.) 1,198.00p -2.92%
Babcock International Group (BAB) 1,014.00p -2.50%
Royal Mail (RMG) 439.30p -2.14%
Ashtead Group (AHT) 1,139.00p -2.06%
GlaxoSmithKline (GSK) 1,548.50p -1.68%
Admiral Group (ADM) 1,603.00p -1.60%

FTSE 250 - Risers
Ophir Energy (OPHR) 164.00p +4.79%
Playtech (PTEC) 840.50p +3.38%
Fisher (James) & Sons (FSJ) 1,346.00p +3.30%
AA (AA.) 405.00p +2.79%
UDG Healthcare Public Limited Company (UDG) 524.50p +2.74%
Infinis Energy (INFI) 188.40p +2.39%
Fidelity China Special Situations (FCSS) 171.40p +2.33%
Unite Group (UTG) 604.50p +2.20%
Croda International (CRDA) 2,964.00p +2.00%
Inmarsat (ISAT) 998.50p +1.84%

FTSE 250 - Fallers
Tate & Lyle (TATE) 608.50p -5.29%
Serco Group (SRP) 133.30p -3.75%
Ladbrokes (LAD) 102.70p -3.20%
Rotork (ROR) 2,459.00p -2.96%
Petra Diamonds Ltd.(DI) (PDL) 161.00p -2.78%
SSP Group (SSPG) 301.90p -2.68%
Ashmore Group (ASHM) 303.50p -2.57%
Booker Group (BOK) 147.10p -2.52%
Evraz (EVR) 186.10p -2.16%
Ocado Group (OCDO) 340.10p -2.13%