LONDON, Oct 19 — UK’s main stock indexes fell today after data showed consumer prices hit a 40-year high again in September, raising worries about their impact on the economy, while banking stocks were hit by reports of windfall taxes.
The FTSE 100 index of top UK companies slipped 0.1 per cent after a four-day run of gains, aided by the historic reversal of the new government’s failed fiscal plan, while a weaker pound helped lift dollar earners such as BP and GSK.
The biggest jump in food prices since 1980 pushed British inflation back into double digits in September, matching a 40-year high hit in July, in a new blow for households grappling with the cost-of-living crisis.
“It has been a measured response both in the FX and bond market so far,” said Alan Custis, head of UK equities at Lazard Asset Management.
“The market is still thinking somewhere between a 75 and 100 bps rate hike in November probably on the back of this print, and a lot of that is already baked into the market.”
Further denting the market mood, Lloyds Banking Group and Natwest Group Plc led losses among bank stocks after a media report said UK Chancellor Jeremy Hunt was preparing to raid the profits of banks as the government seeks new sources of cash to shore up its finances.
UK’s banking index was down 0.6 per cent, while the investment banking & brokerages index dropped 1.6 per cent.
“The initial reaction in the market has been negative... but it’s certainly manageable from a profit standpoint,” Custis said, adding he sees it as a good buying opportunity ahead of earnings later this month.
The domestically exposed FTSE 250 index dropped 1.1 per cent after closing at a near two-week high in the previous session.
Online fashion retailer ASOS jumped 12.1 per cent after it vowed to overhaul its business model. The economic slowdown combined with a string of operational problems have been hammering its profits.
Chief executive José Antonio Ramos Calamonte told Reuters the company was not currently considering an equity issue. — Reuters
