FTSE declines as bottlenecks heighten fears of growth


GGood morning.

The FTSE 100 is expected to climb a few inches higher this morning after breaking yesterday’s surge by the Bank of England‘s warning that inflation will be even higher than its 4 forecast given the ongoing supply chain crisis.

That sent the pound up 0.6 percent against the dollar yesterday as London’s main index ran out of steam and fell to 7,078.35 points by close of trading.

Today it is expected to open 0.16 percent higher and hit 7,088 points after the German and French stock exchanges posted nearly 1 percent gains.

Michael Hewson, Senior Market Analyst at CMC Markets, said, “Yesterday was another positive day for European markets, rising for the third day in a row, shaking off worries about the Chinese real estate market earlier in the week and despite evidence that the overall economy Slowdown due to increasing constraints in the supply chain.

“The FTSE100 did its best to repeat its role as a multi-year party pooper who fell back from its intraday highs and ended in negative territory, which could be partly due to the sharp rise in the pound and gilt yields.

“Even so, markets in Europe and the US are back in positive territory for the week, a scenario that didn’t look very likely on Monday as fears of Evergrande bankruptcy circled investors.”

5 things to get the day off to a good start

1) Interest rates will rise as early as February due to the rise in inflation: The Bank of England has been forced to revise its inflation forecasts as rising energy costs, labor shortages and chaos in the supply chain hamper the UK’s recovery from Covid.

2) Alarm as gas stations are starting fuel rationing: Motorists were warned of bottlenecks at gas stations on Thursday evening when BP announced it would close tanks and ration gasoline and diesel because of a shortage of truck drivers.

3) George Osborne brings a Russian oligarch to his new investment bank: George Osborne has reportedly hired his new investment bank employer to advise EN +, the Russian metals giant founded by Oleg Deripaska.

4) British Airways abandons plans for a new low cost airline in Gatwick: British Airways stands ready to abolish almost all short-haul flights from Gatwick after pilots rejected the airline’s plan to start a new low-cost airline and made massive pay cuts on them.

5) Ford is considering Halewood plant across Germany for EV systems: Ford is considering whether to build transmission systems for electric cars at its Halewood plant on Merseyside and not at a location in Germany.

What happened overnight

Asian stocks were strained on Friday amid ongoing uncertainty about the fate of debt-ridden China Evergrande, as risk appetite spiked Wall Street and US benchmark government bond yields.

MSCI’s broadest index for Asia Pacific stocks outside of Japan fell 0.1 percent and was set at a weekly loss of 0.68 percent. Australian stocks fell 0.41 percent while the Hong Kong benchmark was largely flat.

However, the Japanese Nikkei rose 1.93 percent, catching up on global gains after a holiday. Chinese blue chips reversed early losses and gained 0.6 percent after a cash injection from the central bank.

Investors continue to worry about the fate of property developer China Evergrande, who faced an interest payment deadline on Thursday. Shares fell 5.2 percent on Friday after rising 17.6 percent the day before.

Comes today

  • Business: CBI Retail Sales Survey (UNITED KINGDOM); Sale of new houses (US)

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