FTSE 100 dips amid Covid and interest rate fears

The FTSE 100 plunged lower on the back of renewed coronavirus worries in China and the European Central Bank’s (ECB) plan to soon hike interest rates.

Shares across Europe started the day in negative territory following the news that some parts of Shanghai will go into another lockdown with a widespread testing programme to be conducted this weekend.

Losses grew further after the ECB outlined plans for rate rises in July and September.

London’s top flight ended the day down 116.79 points, or 1.54%, at 7,476.21.

The German Dax decreased by 1.73% by the end of the session while the French Cac fell 1.4%.

“It might be late to the party, but the ECB looks committed to raising rates,” said Chris Beauchamp, chief market analyst at IG.

“This has given fresh impetus to the rush to sell stocks, with Wall Street beginning the day in the red and European markets seeing losses intensify.

“Investors can look at today’s oil prices and realise that high CPI readings aren’t going away, so hopes of a cooling in the pace of central bank tightening are likely to remain unfulfilled.”

Meanwhile, sterling moved lower towards the end of a choppy day for currencies.

The pound was down 0.2% against the dollar at 1.251 and dropped 0.22% against the euro to 1.174.

In London, retail stocks were among the biggest fallers, with Sainsbury’s, Kingfisher and Ocado all dropping amid concerns over how inflation will knock customer sentiment.

Brent crude decreased by 0.15% to 123.45 US dollars per barrel when the London markets closed.