Markets drop after strong Monday

24 May 2022, 17:24

The London city skyline
London city skyline. Picture: PA

Joining markets across the world, the FTSE 100 ended down 29.09 points to 7484.35, a drop of 0.4%.

London’s top flight index gave back some of its early-week gains on Tuesday after economic survey data suggested a slowdown in growth.

Joining markets across the world, the FTSE 100 ended down 29.09 points to 7484.35, a drop of 0.4%.

It came after the Purchasing Managers Index (PMI) indicated that growth has slowed significantly for the UK’s private sector. The index scored considerably below expert predictions.

“Markets in Europe have given back some of yesterday’s gains, weighed down by further evidence of economic weakness in the form of a big earnings downgrade from US social media company Snap, after last night’s US close, and lacklustre PMI reports that suggest rising prices are reducing profits and demand,” said CMC Markets analyst Michael Hewson.

While the FTSE dropped, it still did better than many of its international rivals. But worries of a windfall tax on energy companies as well as oil and gas producers weighed on some of the index’s companies.

“This has contributed to sharp declines in SSE and Centrica, along with Harbour Energy, which has only just managed to turn its fortunes around having been formed out of the wreckage of Premier Oil last year,” Mr Hewson said.

He added: “Banks are continuing to outperform despite rising recession concerns, probably due to the more hawkish bias of central banks, though that by itself has its downsides as it will increase pressure on the more highly leveraged consumer, with HSBC and Barclays leading the way.”

In New York, the S&P 400 was trading down 2.2% and the Dow Jones had lost 1.4% at around the time that markets were closing in London.

In Germany, the Dax closed down 1.8%, while Paris’s Cac 40 fell 1.7%.

On currency markets, one pound could buy 1.2517 dollars, down 0.05%, or 1.1663 euros, down 0.11%.

In company news, Wagamama owner the Restaurant Group warned that food and drink costs could rise by between 9% and 10% this financial year.

The company, which also owns Frankie & Benny’s, had previously predicted a 5% rise only two months ago, but the war in Ukraine pushed up prices rapidly.

Wagamama is doing all right despite these pressures, with sales up 18% on a like-for-like basis in the first quarter of the year. This has slowed so far during the second quarter but remains in double digits.

Shares in the company dropped 2.5%.

The biggest risers on the FTSE 100 were HSBC, up 17.9p to 518.9p, Barclays, up 5.04p to 162.78p, Airtel Africa, up 3.8p to 152.6p, Fresnillo, up 18.4p to 818.8p, and Standard Chartered, up 13.6p to 336.6p.

The biggest fallers on the FTSE 100 were WPP, down 89.8p to 875.6p, SSE, down 150.5p to 1,766p, Scottish Mortgage Investment Trust, down 48p to 693.2p, Royal Mail, down 18.3p to 313.7p, and Hargreaves Lansdown, down 43.4p to 829.4p.

By Press Association