London close: Stocks slump, US inflation and BoE in focus
Stocks in London finished the session in the red, tracking losses on Wall Street, with the Dow Jones Industrials headed for its biggest weekly loss since 2008 after giving back early gains, having traded in a wide 600-point range in just the first 90 minutes of the Friday session.
Worth noting perhaps, some traders pointed out that investors were already looking ahead to the release next week of US consumer price figures for the month of January.
Against that backdrop, earlier in the session Bank of England deputy governor, Ben Broadbent, told BBC Radio two hikes in Bank Rate in the space of a year should not come as a shock to anyone.
In timely fashion, Jim Reid at Deutsche Bank chimed in: "Given how sensitive markets were to a slightly hawkish BoE yesterday, one can only imagine the turmoil on Wednesday next week if US CPI comes in ahead of expectations."
Thus, at the closing bell, the FTSE 100 was down 1.09% at 7,092.43, while the pound had turned lower after figures showed a widening of the trade deficit and a sharp drop in industrial production in December.
Sterling was off 0.73% versus the dollar at 1.3796 and 0.65% lower against the euro at 1.1286, having risen sharply during the previous session following unexpectedly hawkish comments from the Bank of England, which signalled the need for interest rates to rise sooner and more than previously anticipated.
Figures from the Office for National Statistics showed industrial production sank at the end of last year, although this was due almost entirely to the closure of the North Sea Forties oil pipeline.
Total output shrank by 1.3% on the month in December, above the 0.9% drop analysts had pencilled in, as the pipeline shutdown led to a 19.1% plunge in mining and quarrying production.
Construction figures were a bright spot, however, with output up 1.6% on the month in December, comfortably beating expectations for a 0.1% rise.
In other events across the pond that market participants were closely watching, US lawmakers voted to pass a two-year budget that will boost spending by $300bn. The US government officially shut down for the second time this year earlier as Congress had failed to meet the midnight on Thursday deadline to vote on the new budget. However, with the measures now passed by both the Senate and the House, the shutdown could end before the working day begins.
In corporate news, Shaftesbury ticked lower, giving back earlier gains even as the central London-focused property developer said it has seen continuing high footfall at its retail properties and robust trading in the period from 1 October 2017 to 8 February 2018.
Drax was among several energy companies in the red after the Yorkshire power plant group secured agreements worth a combined £10m to provide capacity from two existing coal units.
On the upside, British Land rose after announcing the acquisition of the Woolwich Estate, covering 4.9 acres in south east London, for a headline price £103m - representing a net initial yield of 4.1%.
Plastics manufacturer Victrex on the other hand edged up after reporting a very strong start to the year, with industrial sales led by consumer electronics to offset a slightly weaker performance from medical customers.
In terms of sectors, heavily-weighted miners were doing well, with Anglo American, Rio Tinto and Antofagasta all higher as base metals prices advanced.
Outside of the FTSE 350, deal news helped to inject a little life into proceedings, as Trinity Mirror rallied after agreeing to buy the publishing assets of Northern & Shell, which include the Daily Express, the Daily Star and OK magazine.
FTSE 100 - Risers
Direct Line Insurance Group (DLG) 378.50p 2.71%
Admiral Group (ADM) 1,852.50p 1.81%
Taylor Wimpey (TW.) 184.15p 1.21%
Barratt Developments (BDEV) 554.00p 1.06%
Berkeley Group Holdings (The) (BKG) 3,760.00p 0.94%
Paddy Power Betfair (PPB) 8,095.00p 0.87%
Rio Tinto (RIO) 3,788.50p 0.84%
Anglo American (AAL) 1,604.40p 0.65%
Persimmon (PSN) 2,409.00p 0.63%
Hammerson (HMSO) 465.80p 0.60%
FTSE 100 - Fallers
Johnson Matthey (JMAT) 3,110.00p -4.34%
NMC Health (NMC) 3,090.00p -3.74%
Pearson (PSON) 658.80p -3.26%
Royal Bank of Scotland Group (RBS) 274.50p -3.21%
ITV (ITV) 160.00p -3.03%
Burberry Group (BRBY) 1,498.00p -2.95%
3i Group (III) 888.40p -2.69%
United Utilities Group (UU.) 693.40p -2.53%
Next (NXT) 4,722.00p -2.48%
Mondi (MNDI) 1,766.00p -2.38%
FTSE 250 - Risers
NewRiver REIT (NRR) 296.50p 4.96%
Bovis Homes Group (BVS) 1,071.00p 4.59%
Purecircle Limited (DI) (PURE) 423.00p 4.57%
Stobart Group Ltd. (STOB) 260.50p 3.58%
Capita (CPI) 194.85p 3.42%
Card Factory (CARD) 196.90p 3.41%
Fidessa Group (FDSA) 2,365.00p 3.05%
Daejan Holdings (DJAN) 5,780.00p 2.30%
Capital & Counties Properties (CAPC) 275.70p 2.22%
Safestore Holdings (SAFE) 495.40p 2.14%
FTSE 250 - Fallers
Ashmore Group (ASHM) 386.60p -8.56%
AA (AA.) 119.30p -4.64%
F&C Global Smaller Companies (FCS) 1,265.00p -4.17%
Vedanta Resources (VED) 701.40p -3.60%
Investec (INVP) 592.40p -3.52%
Hikma Pharmaceuticals (HIK) 860.60p -3.46%
Tate & Lyle (TATE) 582.00p -3.35%
Man Group (EMG) 183.50p -3.32%
Saga (SAGA) 111.80p -3.29%
Ted Baker (TED) 2,954.00p -3.27%