Mining investors and bitcoin hoarders abandoned their sectors in droves as separate narratives out of China made them run for their lives on Wednesday.
The FTSE 100, the biggest index in London, saw its value slashed by 1.2% by the end of the day, led by its heavyweight miners.
The index ended down 84 points to 6,950.2.
Michael Hewson, an analyst at CMC Markets, said that the wider sell-off in the market had been caused by worries over inflation.
He added that investors were worried that shortages in supply chains and of workers might threaten the UK’s economic recovery. This would mean that inflation could come to layer on pressures in the longer term.
“That said, weakness in commodity prices isn’t exactly helping sentiment either, after Chinese authorities suggested curbs on aggressive increases in prices which has clobbered the mining sector,” Mr Hewson said.
Antofagasta, Anglo American, BHP, Rio Tinto and Glencore led the charge into the abyss, all posting share price losses of more than 3%.
China also waved its wand in the cryptocurrency market when its central bank said the currencies should not be used as a form of payment.
Leading cryptocurrencies lost big chunks of their value, including ethereum, which fell 40%, while bitcoin dropped below 40,000 dollars.
“This isn’t the first time that China has tried to curb the use of cryptocurrencies, given that it’s in their interests to do so if they want to promote their own digital currency,” Mr Hewson said.
The sentiment that hit the FTSE also seemed to depress global peers. The S&P 500 was down 1% and the Dow Jones 1.2% shortly after markets closed in Europe, where Germany’s Dax fell 1.8% and the Cac in France dropped 1.4%.
Sterling notched up a 0.1% rise against the European and US currencies. By the end of the day, one pound bought 1.4163 dollars or 1.1595 euros.
The price of Brent crude oil dropped 3.4% to 66.39 dollars per barrel.
Pubs found themselves in the spotlight on Wednesday, just two days after indoor service started for the first time in months in England.
Marston’s reported a £105.5 million pre-tax loss in the last six-month period due to lockdown. The company is currently making sales of around £8 for every £10 it made before the pandemic. Shares fell 5.3%.
Mitchells & Butlers, which owns Toby Carvery and All Bar One, reported a £200 million loss. Its shares closed down 1.1%.
While pubs and restaurants have suffered, makers of food for the home have had a better year, leading Premier Foods – which makes Ambrosia Custard and Oxo cubes – to bring back its dividend for the first time since the last financial crisis more than a decade ago.
Sales soared and pre-tax profit jumped by levels not seen since before 2004 in the latest 12-month period. Shares rose 1.4%.
Online retailers have also benefited from the lockdowns, although Boohoo made the headlines for the wrong reasons during the pandemic amid allegations of poor conditions and pay for staff at its UK suppliers. On Wednesday, it said that bonuses would in future be linked to improvements in the supply chain. Shares dipped 0.5%.
Shares in Dunelm rose 6.2% after it revealed that profits were expected to beat expectations.
Funding Circle’s shares also jumped, by 7.8%, after it said that results would beat forecasts.
Severn Trent revealed a 17% dip in profit, shares dropped 0.3% on the news.
And finally, a 403p per share bid by KKR for John Laing sent the infrastructure company’s shares soaring 11.3%.
The biggest risers on the FTSE 100 were Ferguson, up 202p at 9,472p; Polymetal, up 24.5p at 1,699p; DCC, up 60p at 6,050p; BT, up 1.5p at 172p; and, LSE, up 62p at 7,312p.
The biggest fallers on the index were Antofagasta, down 82.5p at 1,531.5p; Anglo American, down 156p at 3,154p; BHP, down 102.5p at 2,138p; Rio Tinto, down 236.15p at 6,013.85p; and Glencore, down 10.8p at 313.8p.