FTSE 100 slips back into red after Wall Street inflation fears

The FTSE 100 was dragged into negative territory at the end of trading after US data raised inflation fears while government borrowing costs also increased in Europe.

Wall Street opened lower and weighed on trader sentiment in London after better-than-expected jobless figures and durable goods orders.

The positive economic data unnerved some investors who are concerned that it could mean inflation will start to tick up and prompt tighter monetary policy.

London’s top flight closed 7.01 points, or 0.11%, lower at 6,651.96 at the close of play on Thursday.

Across the continent, the other major markets were also cautious and tumbled into the red late in the session.

The German Dax was 0.54% lower and the French Cac moved 0.24% lower.

Michael Hewson, chief market analyst at CMC Markets UK, said: “European markets have once again flattered to deceive today, starting off in promising fashion, before slipping back into the close, with US markets, and rising bond yields acting as a little bit of a drag.

“While rising US yields have been attracting the most attention, we’re also seeing some evidence of a tightening of financial conditions here in Europe, with sharp rises in government borrowing costs from Germany to Greece.

“The European Central Bank certainly appears to be becoming concerned about just such a scenario with chief economist Philip Lane saying that the ECB is prepared to buy bonds flexibly in order to prevent just such a fiscal tightening.”

Meanwhile, sterling recoiled after hitting an almost three-year high against the dollar on Wednesday.

The pound decreased by 0.3% versus the US dollar to 1.410 and was down 0.75% against the euro at 1.153.

In company news, Standard Chartered was one of the day’s biggest fallers after it revealed that its profits were cut by more than half.

The Asia-focused bank saw pre-tax profits tumble 57% to 1.6 billion US dollars (£1.1 billion) in 2020 after it booked a major charge due to loan losses related to the pandemic.

Shares in Standard Chartered fell by 31.4p to 478p at the close of trading.

DS Smith was sat high at the opposite end of the FTSE amid speculation that the packaging giant could be the target of a takeover offer from rival Mondi.

Shares in the company closed 21.9p higher at 405.9p after Bloomberg reported on the interest from Mondi, which dipped in value as investors digested the coverage.

Aston Martin’s shares jumped despite the luxury car manufacturer posting a slump in annual sales and profits, as its latest revenue figures came in ahead of expectations.

Shares climbed by 136p to 2,137p as a result.

The price of oil jumped to a 13-month high earlier on Thursday before losing steam to sit broadly flat after general trading sentiment took a downturn.

The price of Brent crude oil decreased by 0.03% to 66.99 dollars per barrel.

The biggest risers on the FTSE 100 were Evraz, up 33.6p to 598.4p, DS Smith, up 21.9p to 405.9p, Anglo American, up 112p to 2953.5p, Rio Tinto, up 125p to 6480p, and BP, up 5.75p to 304.55p.

The biggest fallers on the FTSE 100 were Standard Chartered, down 31.4p to 478p, Intermediate Capital Group, down 90p to 1811p, Polymetal, down 54.5p to 1452p, Persimmon, down 93p to 2671p, and Berkeley, down 145p to 4172p.