The FTSE dropped sharply in early trade on Friday, with fallers led by big tech representative Scottish Mortgage Investment Trust PLC (LSE:SMT) and Royal Mail PLC.
London’s blue chip index fell 83 points, or more than 1%, to just under 7503 in the first half hour, its lowest point this week.
Richard Hunter, market analyst at Interactive Investor, said: “More gloom is descending as investors digest some major earnings disappointments, adding to concerns of an accelerating monetary tightening schedule.”
He said the latest catalysts for another downward lurch came via earnings reports from Netflix (Netflix shares slump on weak subscriber growth forecast) and another warning of low demand from home exercisers Peloton.
“The news played into investor concerns that the pandemic-related demand for consumer goods was not sustainable,” said Hunter.
“So far, the reporting season has been patchy, and next week will provide further tests to sentiment with the likes of Apple and Microsoft trying to lift the mood.”
Disappointing UK retail data this morning has not helped matters, though some economists said the numbers are unlikely to dissuade the Bank of England to hike interest rates again next month.
Retail sales volumes, including petrol, fell by 3.7% month-to-month in December, well below the consensus forecast for a 0.6% decline.
Year-on-year growth worsened to 0.9% from 4.3% in November, also below the consensus, 3.4%.
For the fourth quarter overall, retail sales were down only 0.2% compared to the Q3 and were still 4.0% above their 2019 average level, said economist Sam Tombs at Pantheon Macroeconomics.
“That’s a good result for retailers, given that consumers always were likely to rotate back towards purchasing services, and households’ real incomes fell in Q4, due to the end of the furlough scheme, the withdrawal of the uplift to Universal Credit, and the surge in CPI inflation.”
He said December’s sharp decline in retail sales are not likely to dissuade the Bank of England’s monetary policy committee from raising interest rate again at its meeting on 3 February.
The December drop is “largely is the consequence of consumers purchasing Christmas gifts earlier than normal last year, due to concerns about product availability”, he said, with the decline in overall volumes in December was driven by a 7.1% month-to-month drop in non-food sales.
6.29am: Wall Street sets bearish tone
A late sell-off yesterday in US markets looks set to prompt an early retreat on this side of the Pond.
Spread betting quotes indicate the FTSE 100 will open 93 points lower at 7,492.
Stateside, the Dow Jones slumped 313 points to 34,715 after making a positive start while the S&P 500 fell 50 points to 4,483.
Asian markets this morning are in the red with Japan’s Nikkei 225 231 points weaker at 27,542 and Hong Kong’s Hang Seng off 166 points at 24,786.
“On the data front we have the latest UK retail sales numbers for December,…
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