MARKET REPORT: FTSE spooked after sharp sell-off on Wall Street

Shares in London plunged after Wall Street had its worst performance since the depth of the pandemic.

After a heavy sell-off in New York on Tuesday, the FTSE 100 fell 1.5 percent, or 108.56 points, to 7277.30, and the FTSE 250 fell 1.7 percent, or 318.01 points, to 18849.20. .

The losses were reflected across Europe as the key benchmark in Germany fell 1.2 percent, while the French Cac fell 0.4 percent.

In the US, the Dow Jones has recouped some of its losses, up 0.2 percent, after falling nearly 4 percent in what was Wall Street’s biggest decline since June 2020. The Nasdaq rose 0.7 percent after a 5.5 percent slump.

Markets have been shaken by the prospect of rate hikes by the US Federal Reserve and Bank of England as central banks fight inflation.

While inflation in the US fell to 8.3 percent in August, it was higher than expected and set the stage for a huge surge there next week.

The Bank of England is also expected to go on strike next week, despite a slight decline in UK inflation from 10.1 percent in July to 9.9 percent in August.

Hargreaves Lansdown analyst Susannah Streeter said there are growing concerns that inflation will become a mainstay in the economy.

She said: “More aggressive rate hikes will sharply escalate borrowing costs, and concerns are mounting about the effect this will have on the global economy as we flee the era of cheap money.”

Stock Watch – Trackwise Designs

Trackwise Designs collapsed after it said it needed to raise money to commission a new factory.

It had signed a four-year deal to supply its circuits to a British electric vehicle manufacturer.

But the AIM-listed company’s financing plans have been compromised after the customer said last month it expects fewer units.

Trackwise is in ‘advanced talks’ about a new contract and is ‘looking at options for additional financing’. Shares fell 47.4 percent, or 9p, to 10p.

Reports have suggested that the Bank of Japan could soon act to support the weak yen, something it hasn’t done since 1998.

In London, broker downgrades put further pressure on the blue chip index.

A day after his shares plunged more than 14 percent after he warned that annual sales would fall, Barclays lowered Ocado’s price target from 775p to 740p. Credit Suisse lowered its target price by nearly 400p to 590p.

The retailer’s shares fell 8.2 percent, or 56p, to 623.2p.

There was little cheer for investment firm Abrdn as Deutsche Bank sees further risk to the stock from an ‘earnings and capital perspective’, dropping its share price from 175p to 135p, pushing it down 4.6 percent or 6.9p to 142.3p fell.

Auto Trader fell 3.1 percent, or 20.2p, to 622.8p after Morgan Stanley lowered the online car seller’s rating from “overweight” to “equal-weight,” and lowered the target price to 682p, from 755p.

Rio Tinto has joined forces with its largest client in a £1.7 billion iron ore project in Pilbara, Australia. The mining giant will invest £1.12 billion and hold a 54 percent stake, with the rest being owned by Baowu. Rio fell 2.3 percent, or 111p, to 4798p.

Home furnisher Dunelm posted record profits as stores remained open all year for the first time since Covid struck.

Full year profits were up 32.4 per cent to £209 million and sales were up 16.2 per cent to £1.55 billion. Boss Nick Wilkinson pledged to ‘make every pound count’, and he is on track to deliver results in line with expectations. It rose 3.5 percent, or 25p, to 748p.

Tullow Oil is ‘fully committed’ to a merger with Capricorn Energy. In its half-year results, it said the deal will create a “leading African energy company.”

The comments came after Capricorn shareholder Schroders said it would not support the deal, as it believes Capricorn would take a 70 percent stake – well above the planned 47 percent. Tullow rose 2.2 percent, or 1.1p, to 50.8p.

Dublin drinks company C&C, whose brands are Bulmers and Magners, expects sales to rise 35 percent to £777 million in the six months to the end of August and profits from £45 million to £47 million.

But Shore Capital cut its full-year profit forecasts by £8.6m to around £77.7m after C&C faced a slowdown in trading. C&C fell 8.1 percent, or 14.1p, to 159.8p.