INVESTORS ran for cover today as inflation fears mount across the globe, sending stock markets into a tailspin.
A week of market gains was erased in just a few hours, with the FTSE100 down by more than 2% and some blue-chip stocks as much as 6% lower.
The loss of confidence started on Wall Street overnight amid fears that central banks will tighten monetary policy to stop economies from overheating.
Tech-focused growth companies were among the hardest hit as their lofty valuations became harder to justify, but banks, travel and leisure, and miners all suffered.
Big fallers in London included the Tesla backer Scottish Mortgage Investment Trust as the FTSE 100 index slumped 150.11 points to 6,972.59.
At one point, the entire field of FTSE 100 stocks was lower as British Airways owner IAG and GKN business Melrose Industries fell 5% .
Watch: FTSE 100 'milestone' as it tops 7,000 mark for first time in more than a year
The top flight had risen by more than 2% across last week to 7,130 after mining stocks including Rio Tinto surged on record commodity prices.
Those gains were wiped out in an apparently indiscriminate and sustained sell-off.
Rolls Royce, Next, JD Sports, Burberry, Weir and Experian were all down by more than 4% at mid-morning.
FTSE100 newcomer Renishaw - an engineering firm based in Gloucestershire which makes machine tools and measuring machines - was down 6.5%.
AJ Bell investment director Russ Mould said: “The market just can’t shake the inflation fears which are clouding the recovery from Covid.
“Some days investors appear relaxed about inflation risks and the possibility of central banks having to lift rates and withdraw stimulus. Today is not one of those days as, after last night’s big sell-off on Nasdaq, the FTSE 100 finds itself undoing much of its recent progress and trading below 7,000.
“Surging commodity prices are acting as a canary in the coal mine for inflation – with the huge infrastructure and stimulus packages in the US a key contributing factor.
“The valuations of the tech-based growth companies in the US are harder to justify in an inflationary and rising interest rate environment – where lower risk assets typically offer higher returns – hence the big fall in the Nasdaq yesterday.”
The FTSE 250 index fared no better after falling 441.26 points to 22,255.79.
The jitters were partially offset by Hut Group owner THG rising more than 11% on the back of a $1 billion fundraising under which Japanese conglomerate Softbank will take a big stake in the e-commerce consumer goods group.
Shares in THG — set up by entrepreneur Matt Moulding in 2004 — rallied 64p to 660p, against September’s 500p IPO price.
Another new tech stock is data business Glantus Holdings, which today raised £10 million as it looks to target more of the business payments automation market. Shares placed at 102p, reached 107.5p on launch.
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