FTSE 100 ends slightly lower as heavyweights recover

Summary

  • UK shares ended slightly lower, recovering from the early afternoon losses
  • FTSE 100 ended the two-day rally, while FTSE 250 lost 0.60 per cent
  • A 9 per cent rise in China’s factory-gate prices renewed the inflationary fears

UK shares ended marginally lower on Wednesday, 9 May, recovering from the early afternoon losses with the headline FTSE 100 index snapping the two-day gain. The index started in the negative region tracking the subdued Asian peers, except China.

Investors across the globe remain unnerved after China reported a massive rise in the factory gate prices, sending the inflationary shockwaves. Earlier last month, Wall Street retreated badly with Nasdaq Composite witnessing a huge sell-off due to renewed fears of rising inflation.

                         

Global Market Round Up || US Stocks and FTSE 100 Edge Lower

 

According to the data released by the National Statistics Bureau of China, the producer’s prices in May 2021 grew by 9 per cent on-year, surpassing the April’s surge of 6.8 per cent. This was the sharpest increase in the factory gate prices since September 2008, the moment in the global financial crisis when the then America’s fourth largest investment bank Lehmen Brothers collapsed and filed for bankruptcy.

Sequentially, this has been the fifth consecutive jump in the factory gate prices of China. A fast-paced bounce back in domestic production has fuelled the recent rise in the commodity prices. Higher prices of goods leaving the Chinese factories will certainly cost higher to the importers, leading to a likelihood of rising inflation across the globe.

Also Read | Why are Royal Mail shares on a rising spree in 2021?

As per the data available with the London Stock Exchange, FTSE 100 settled at 7,081.01, down 0.20 per cent, from the previous close of 7,095.09. In the early afternoon session, the index touched a low of 7,046.02, while it failed to breach the last close. The broader stock indices FTSE 350 and FTSE All-Share dropped 0.27 per cent each to conclude at 4,062.85 and 4,045.51, respectively.

Meanwhile, the mid-cap index FTSE 250 shed as much as 0.60 per cent to finish at 22,758.97 from the previous close of 22,895.50. The market participants are looking for fresh cues that can help in regaining the lost momentum as some fear that a worthwhile recovery may take longer-than-expected time.

Of late, investors have apparently managed to overturn the worries of Covid-19 following successful rollout of the vaccination programme with the healthcare administration inoculating more than 40 million people. Notably, over 27 million individuals have completed the two-dose regimen, effectively securing the highest possible protection from the novel coronavirus, the data released by the Department of Health and Social Care on 5 June showed.

Also Read | What China’s record factory-gate prices mean for global economy

The government of the United Kingdom has maintained to meet the predefined targets of immunisation across the country. The phased reopening, restarting of vulnerable sectors including the hospitality, leisure, international holidays, bars, pubs, restaurants, a number of outdoor, as well as indoor settings have provided a much needed cushion to the ailing businesses that were forced to limit their respective operations due the pandemic-induced restrictions and other precautionary curbs in place.


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