London midday: Stocks slump amid inflation concerns
London stocks were firmly in the red by midday on Friday as a selloff in bond markets spooked investors.
The FTSE 100 was down 1.3% at 6,568.66, having briefly eased off its lows mid-morning, while sterling was off 0.9% against the dollar at 1.3896.
Sentiment took a knock after the yield on the 10-year US Treasury note briefly spiked above 1.6% on Thursday for the first time in more than a year, before retreating back under 1.5%, amid expectations of higher inflation.
Neil Wilson, chief market analyst at Markets.com, said: "Stock markets are in retreat as bond yields advance. Yields are rising across the globe, prompting investors to ditch stocks, especially richly valued growth names.
"Markets are now starting to price for rate hikes far sooner than the Fed is indicating it will act. It’s not that rates are particularly high, it’s more the pace of the move taking frothy equity markets off guard. Valuations are stretched, so richly valued stocks are easily moved by these kinds of gyrations in the bond market.
"Whilst investors had been reasonably comfortable with a rising tide for rates, this sudden lurch higher requires repricing."
In equity markets, miners were under the cosh, with Anglo American, Glencore, Antofagasta and Rio all lower.
Rightmove was weaker as it reported a drop in full-year profit as revenue took a hit after it gave discounts to customers during the coronavirus pandemic.
RSA Insurance nudged lower even as it posted a 15% rise in full-year operating profit to £751m ahead of its £7.2bn takeover by Denmark's Tryg and Canada's Intact Financial.
British Airways and Iberia owner IAG flew higher despite swinging to a massive €7.4bn annual operating loss and pulling guidance for 2021, reflecting the impact of the Covid-19 crisis. The loss compares with a profit of €2.61m a year ago.
Airlines more generally were on the rise, with easyJet and Wizz both in the black, perhaps buoyed by the prospect of EU vaccine passports.
Pets at Home rallied as it upgraded its full-year outlook after a strong fourth quarter.
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 191.95p 3.06%
Reckitt Benckiser Group (RB.) 6,084.00p 2.25%
Rentokil Initial (RTO) 478.10p 1.34%
AstraZeneca (AZN) 7,085.00p 1.07%
Hikma Pharmaceuticals (HIK) 2,362.00p 0.98%
Ocado Group (OCDO) 2,262.00p 0.76%
Avast (AVST) 470.20p 0.69%
Sainsbury (J) (SBRY) 231.00p 0.65%
London Stock Exchange Group (LSEG) 9,758.00p 0.49%
Kingfisher (KGF) 265.10p 0.49%
FTSE 100 - Fallers
Scottish Mortgage Inv Trust (SMT) 1,109.00p -7.27%
Anglo American (AAL) 2,788.50p -5.59%
Rightmove (RMV) 575.00p -5.12%
British Land Company (BLND) 498.60p -4.04%
Land Securities Group (LAND) 663.60p -3.83%
BP (BP.) 293.90p -3.50%
Fresnillo (FRES) 918.80p -3.47%
Glencore (GLEN) 294.45p -3.46%
Antofagasta (ANTO) 1,784.00p -3.33%
Rio Tinto (RIO) 6,279.00p -3.10%
FTSE 250 - Risers
Pets at Home Group (PETS) 399.60p 4.33%
easyJet (EZJ) 991.40p 2.08%
Signature Aviation (SIG) 399.90p 1.60%
Wizz Air Holdings (WIZZ) 5,380.00p 1.51%
Inchcape (INCH) 705.00p 1.44%
Centrica (CNA) 52.72p 1.38%
Grafton Group Ut (GFTU) 992.00p 1.33%
Savills (SVS) 1,159.00p 1.31%
National Express Group (NEX) 300.60p 1.08%
Trainline (TRN) 519.50p 1.07%
FTSE 250 - Fallers
Edinburgh Worldwide Inv Trust (EWI) 339.00p -9.24%
Allianz Technology Trust (ATT) 2,635.00p -8.82%
Baillie Gifford US Growth Trust (USA) 316.00p -7.60%
Polar Capital Technology Trust (PCT) 2,115.00p -6.00%
Aston Martin Lagonda Global Holdings (AML) 2,012.00p -5.85%
Cineworld Group (CINE) 96.94p -5.75%
Hochschild Mining (HOC) 213.40p -5.16%
Herald Investment Trust (HRI) 2,095.00p -4.77%
Ferrexpo (FXPO) 340.20p -4.06%
Investec (INVP) 194.50p -3.90%