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After a strong start to the year, hopes that the FTSE 100 would reach an all-time high this week have cooled amid new concerns that the global economy is heading for a slowdown in 2023.
The UK’s leading index took off in early January, rising more than 5 percent, close to a record high of 7877.45.
But after a string of weak US data and cautious comments from Federal Reserve officials, the FTSE 100 fell 1.1 percent, or 83.41 points, to 7747.29.
After a series of weak data from the US and cautious comments from Federal Reserve officials, the FTSE 100 fell 1%, or 75.31 points, to 7755.31
The sell-off spread across Europe, with stock markets in Frankfurt, Paris and Milan all falling by more than 1 percent.
In London investors flocked to defensive stocks and Diageo gained 0.7 per cent, or 24.5p, to 3692p, British American Tobacco rose 1.2 per cent, or 37.5p, to 3108p and Imperial Brands climbed 1.2 per cent, or 24p , up to 2051p.
Recession fears caused metals on the London Metal Exchange to collapse and copper fell more than 1 percent. As a result, all heavyweight miners were sold.
Fresnillo was down 2.5 percent, or 23.2p, to 918.6p, Antofagasta, down 4.3 percent, or 76.5p, to 1723p, and Glencore, down 2.2 percent, or 12.5p, to 564, 1p.
At the same time, BP fell 2.4 percent, or 11.5p, to 474.7p and Shell gave up 1.8 percent, or 43p, to 2360.5p.
Banks also struggled after analysts warned that loans could sour in a recession.
Barclays was down 2.6 percent, or 4.72p, to 177.38p and Lloyds was down 1.3 percent, or 0.66p, to 48.81p.
Private equity firms lost ground on fears that the current high interest rate environment would hurt their returns.
3i, owner of retailer Action, fell 1.1 percent, or 15.5 pence, to 1415.5 pence and Bridgepoint, which wants to buy a stake in the Hundred cricket league, fell 7.1 percent, or 16 pence. 6 pence, up to 218.2 pence.
There was also little reason for investors to cheer on corporate news. AJ Bell collapsed after the company told investors that less money was flowing into the trading platform.
Chief executive Michael Summersgill blamed the crisis on the cost of living. It boomed during the pandemic when young men with lots of money were stuck at home looking for something to do.
They decided to take a chance on the markets. AJ Bell was down 7.9 percent, or 29.4p, to 340.8p
Harbor Energy slid, with the oil and gas producer set to pay a higher UK North Sea windfall tax than initially expected.
The company had previously charged a figure of £485 million for 2022, but that will now be significantly higher. It comes as the company plans to cut jobs as it scales back investment in response to the tax.
The levy initially increased the effective tax rate in the North Sea from 40 percent to 65 percent and was raised again to 75 percent at the beginning of this year as the government tried to generate extra revenue. Shares fell 3.2 percent, or 10.2 pence, to 312.6 pence.
Angus Thirwell, CEO of Hotel Chocolat, told investors it was “recession proof” after a strong Christmas.
“Families are looking for uplifting things in a tough environment, things that make you feel good,” says Thirlwell, who owns 27 percent.
“Chocolate is the most important legal substance that can do that.” It rose 12.4 percent, or 23 pence, to 208.5 pence.
Auto Trader sped ahead after Goldman Sachs, a fan of the online classifieds, issued a buy rating on the stock. It added 1 percent or 5.8 pence to 572.6 pence.
And Aston Martin announced that 100 new engineering jobs will be created, ahead of the launch of new models this year, at its Warwickshire headquarters. But shares fell 3.6 percent, or 6.05 pence, to 162.85 pence.
Informa reported a strong end to 2022. Shares were up 0.1 percent, or 0.4p, to 660.4p.
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