September 26, 2022

Pedestrians leave and enter the London Stock Exchange in London, Britain August 15, 2017. REUTERS/Neil Hall/File Photo

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  • UK flash composite PMI at 50.9 vs est 51.1
  • Defensive sectors weigh on FTSE 100
  • Wood Plc drops after H1 results
  • FTSE 100 down 0.3%, FTSE 250 off 0.1%

Aug 23 (Reuters) – UK’s midcap index hit a fresh one-month low on Tuesday as a looming gas crisis in Europe and data showing slower-than-expected growth in business activity exacerbated fears of recession.

The domestically oriented FTSE 250 (.FTMC) slipped 0.1%, down for a third consecutive session, as soaring UK gas prices added fears of surging inflation that has restrained the economy. EU/NG

The exporter-heavy FTSE 100 (.FTSE) slid 0.3%, dragged by pharma and consumer companies. But oil majors Shell (SHEL.L) and BP (BP.L) inched higher, supported by rising crude prices.

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A closely watched survey showed growth in Britain’s private sector slowed to a crawl in August as factory output fell and the larger services sector eked out only a modest expansion, adding to signs recession may be looming. read more

“Although they’re still growing, there’s a fear that they could slip into contraction territory,” said David Madden, market analyst at Equiti Capital in London.

“Combined with that, the Bank of England (BoE) have hiked interest rates loads of times but they’re not getting inflation under control. So now they’ll probably keep hiking rates and compounding the overall issue.”

British consumer price inflation is set to peak at 18.6% in January, more than nine times the BoE’s target, an economist at U.S. bank Citi said on Monday, raising his forecast once again in light of the latest jump in energy prices. read more

Investors expect another 50 bps rate hike when the central bank meets next month.

The Financial Times reported Liz Truss is planning to take emergency action to address the cost of living crisis without an accompanying economic forecast soon after becoming prime minister.

Among single stocks, BT Group (BT.L) rose 1.5% after the British government ruled billionaire Patrick Drahi would not be forced to cut his 12.1% stake in the company as it did not pose any national security implications. read more

Wood Plc (WG.L) slid 3.9% after the oilfield services and engineering firm reported a 5% fall in core earnings from continuing operations in the first half.

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Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Krishna Chandra Eluri and Dhanya Ann Thoppil

Our Standards: The Thomson Reuters Trust Principles.

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