Weak sterling saves FTSE from Wall Street plunge
OVERNIGHT carnage on Wall Street was taken in London’s stride today as a weaker pound helped to cushion the FTSE 100 index against the heightened inflation jitters.
High growth stocks Apple and Amazon were among New York casualties after yields on US bonds hit a one-year high, driven by worries that central banks will have to raise interest rates to counter inflationary pressures as big stimulus measures kick in.
The tech-laden Nasdaq suffered its biggest fall since October after tumbling 3.5% last night, despite reassuring comments on the rates outlook from Federal Reserve chairman Jerome Powell.
The chief investment officer at one of the world’s largest bond fund managers, Pimco’s Dan Ivascyn, also told the FT that concerns about consumer prices were an “inflation head flake”.
Wall Street’s sneeze initially left the FTSE 100 index 1% lower, but the top flight fought back as dollar earners benefited from the pound retreating below the 1.40 barrier.
Beneficiaries included Reckitt Benckiser, which climbed 94p to 6,044p, while the support of several defensive stocks including AstraZeneca and Severn Trent meant the FTSE 100 stood 26.39 points lower at 6,625.57. Scottish Mortgage Investment Trust, which holds a significant stake in Tesla, fell more than 4% or 51p to 1,145p and has now declined by 19% since last week.
Among FTSE 250 stocks impacted by the US sell-off, Baillie Gifford US Growth Trust fell 6% or 20p to 322p and Allianz Technology Trust slid 95p to 2,795p.
The domestic-focused second-tier was 0.4% or 82.5 points lower at 21,115.62, with Pets at Home the best performing stock after adding £8 million to its fullyear profits guidance. As an “essential” retailer, Pets has been able to keep branches open in recent lockdowns. It said profits will be about £85 million in the year to the end of March, prompting shares to jump 7% or 25.2p to 408.2p.