FTSE slides back over inflation fears despite afternoon rally

London’s major markets slid back into the red as concerns over inflation continued to cause havoc with trading.

A rally towards the end of the session failed to help the FTSE completely recover, although some of its major global counterparts improved significantly enough to close higher.

The FTSE 100 closed 41.3 points lower, or 0.59%, at 6,963.33 on Thursday.

Hugh Shields, financial trader at Spreadex, said: “After what was a positive Wednesday for the FTSE, from the bell the index struggled to ignore investors’ growing inflation fears.

“Despite a late rally back this afternoon, the FTSE falls on the day, with the damage of the open too great to fully recover.

“Across the pond however, US markets are up for the first time in four days.”

The Dow Jones and S&P both fought back from hefty falls on Wednesday although they still look unlikely to fully recover their losses by the end of the week.

In mainland Europe, the major markets made gains after strong US sentiment led them to shake off losses from morning trading.

The German Dax increased by 0.33% and the French Cac moved 0.14% higher.

Meanwhile, sterling drifted marginally lower but had another fairly cautious session amid inflation chatter.

The pound decreased by 0.07% versus the US dollar to 1.403 and was down 0.09% against the euro at 1.162.

Bond Street Stock
Burberry shares dipped on Thursday (Yui Mok/PA)

In company news, Burberry finished lower despite a 32% sales rebound in its final quarter thanks to strong demand from rich shoppers in Asia and the US.

Traders were unimpressed as the firm warned it was not expecting tourism spending to recover to pre-pandemic heights for a “number of years” and said investment would continue to impact margins.

Shares closed 88p lower at 2,016p as a result.

BT Group was another of the day’s significant fallers, sliding in value after it reported that profits dipped by almost a quarter – 23% – to £1.8 billion for the year to March.

The telecoms giant said revenue was down 7% to £21.3 billion thanks in part to the impact of the coronavirus pandemic on the business’s consumer and enterprise divisions.

Shares in the business were 10p lower at 159.05p at the close of play.

Elsewhere, investment giant M&G moved higher following a Bloomberg report that rival Schroders had eyed a potential bid to form a 1 trillion dollar fund manager. M&G shares were up 9.2p at 229.2p.

The price of oil dropped as it came under pressure from concerns regarding demand in Asia and news that the US colonial pipeline had reopened, resulting in further supply.

The price of Brent crude decreased by 2.87% to 67.32 dollars per barrel.

The biggest risers on the FTSE 100 were M&G, up 9.2p to 229.2p, SSE, up 36.5p to 1,484p, Pershing Square, up 60p to 2,570p, 3i Group, up 26p to 1,224p, and Ashtead Group, up 102p to 4,903p.

The biggest fallers on the FTSE 100 were BT Group, down 10p to 159.05p, Hargreaves Lansdown, down 81.5p to 1,690.5p, Anglo American, down 150.5p to 3,250.5p, Burberry, down 88p to 2,016p, and Rio Tinto, down 271p to 6,304p.