FTSE 100 in the red as European stock markets slump

Most of London’s top-flight stocks were in the red on Thursday evening as European markets took a dive due to concerns around emerging markets.

The FTSE 100 was down 91.94 points, or 1.22%, at 7,418.34.

David Madden, market analyst at CMC Markets UK, said: “The prospect of four rate hikes from the Federal Reserve in the next 12 months is driving up US government bond yields.

“Traders are worried that EM [emerging market] countries will be hit by higher borrowing costs, and in turn it could damage their economies. The Indian rupee has reached another record low, and the Turkish lira is weaker too as investors are fearful we could be heading for an EM crisis.”

The French Cac was also down, falling 1.47%, and the German Dax declined by 0.35%.

The stronger pound also put pressure on the FTSE 100, as sterling appreciated by 0.53% against the US dollar to 1.302. It also climbed 0.28% to 1.130 euros.

UK car sales slumped by 20%, while car maker Nissan warned that a hard Brexit will have “serious implications” for its Sunderland factory.

“If that is not evidence enough of Britain’s economy struggling ahead of Brexit more will be provided tomorrow when Halifax house price data is released,” said Fiona Cincotta, senior market analyst at City Index.

In London, Ted Baker shares fell after the company became the latest fashion firm to reveal a hit from beleaguered department store chain House of Fraser as it posted lower half-year profits.

The brand said pre-tax profits fell 3.2% to £24.5 million in the six months to August 11, with the group writing off £600,000 owed by House of Fraser, which collapsed into administration in August and has since been bought by Sports Direct.

Shares fell 232p, or 10%, to 2,076p.

There was more bad news on the retail front from DFS, which saw full year profits cut in half after the summer heatwave hit sales in the fourth quarter.

Pre-tax profit for the year to July 28 plummeted 48.5% to £25.8 million, while underlying earnings crashed 7.6% to £76.1 million.

Shares fell 6.5p to 203.5p.

All this was bad news for fellow retailers. Ocado was down 71.2p to 843.8p, Burberry down 115p to 1,913p, and Kingfisher down 5.3p to 255.9p.

Traders were still concerned about oil supplies as the industry braces for the US’s new sanctions against Iran to come into effect. Brent crude was down 0.8% but still trading near four-year highs at 85.32 US dollars per barrel. With no signs that supply levels will make a resurgence, City Index market analyst Ken Odeluga said Brent “may be mounting a challenge” to its latest high.

The biggest risers on the FTSE 100 were Legal & General, up 3.1p to 259.6p, Direct Line up 3.5p to 325.1p, Barclays up 1.78p to 174.3p, and Lloyds Banking Group up 0.54p to 58.93p.

The biggest fallers on the FTSE 100 were Ocado, down 71.2p to 843.8p, Smurfit Kappa, down 194p to 2,786p, DS Smith down 30.5p to 460.9p, and Burberry down 115p to 1,913p.