(Alliance News) -Â It was a downbeat end to the quarter, with stocks on Thursday drooping as traders eye political uncertainty in Washington and grapple with growing inflationary pressures.
The FTSE 100 index closed down 21.74 points, or 0.3%, at 7,086.42 on Thursday. Over the quarter, the blue-chip index has gained 0.7%.
The FTSE 250 ended down 119.68 points, or 0.5%, at 23,031.29 - though has advanced 2.9% over the third quarter. The AIM All-Share closed down 9.74 points, or 0.8%, at 1,243.82, and has fallen 0.4% over the quarter.
The Cboe UK 100 ended ended down 0.1% at 705.72, the Cboe UK 250 closed down 0.1% at 20,905.67, and the Cboe Small Companies ended down 0.2% at 15,661.45.
In European equities on Thursday, the CAC 40 in Paris ended down 0.6%, while the DAX 40 in Frankfurt ended down 0.7%. The euro stood at USD1.1584 at the European equities close Thursday, down against USD1.1618 at the same time on Wednesday.
"There's an enormous amount of uncertainty in the markets at the moment and that's clearly taken its toll...Central banks are doing their best to reassure us that inflation remains just a temporary, supply-side issue but there also seems to be less conviction in their views," said Craig Erlam, senior market analyst at Oanda.
Data on Thursday showed Germany's annual inflation rate accelerated to a near 30-year high in September. On an annual basis, the consumer price index rose 4.1% in September, picking up from August's reading of 3.9%.
The figures came after a raft of warnings from central bankers this week over inflation.
Uncertainty around supply issues are a "threat to growth", the European Central Bank's President Christine Lagarde said on Wednesday at the close of the Frankfurt institution's annual forum. She was joined virtually on the closing panel by the US Federal Reserve's Chair Jerome Powell who said bottlenecks were "holding inflation up" longer than expected.
Bank of England Governor Andrew Bailey at the start of the week sparked stagflation fears as he warned that the UK's pandemic recovery is slowing while price pressures remain heightened.
The pound had a difficult few days in the wake of his remarks, but regained some poise on Thursday to be quoted at USD1.3495 at the London equities close, up compared to USD1.3434 at the close on Wednesday.
A surge in energy prices this week also heightened fears over inflationary pressures, with Brent oil topping USD80 a barrel on Tuesday. However, it settled back to trade at USD78.50 a barrel at the London equities close Thursday from USD79.09 late Wednesday - though oil prices still remain nearly double what they were a year ago.
With inflation continuing to accelerate as the world bounces back from the pandemic, markets have started to brace for the wind back of unprecedented monetary policy and fiscal support.
On Thursday, the UK's pandemic job support programme will be brought to an end after supporting millions of UK workers over the past 18 months. However, uncertainty remains for the future of almost one million workers who were expected to be still receiving support through the financial scheme at the end of September, according to the latest Office for National Statistics estimates.
"Pandemic stimulus measures are being withdrawn at a time of real uncertainty for the markets, whether that be around Covid, the energy crisis or Evergrande, to name just a few," said Oanda's Erlam. "And that's before we even consider events in Washington."
The coming days are expected to be the most critical yet of Joe Biden's presidency, as he negotiates the tricky passage of two giant spending bills and a fix to lift the debt ceiling without the support of Republicans.
But the most urgent priority is funding for federal agencies, and Senate Democrats say they will pass temporary legislation early Thursday, hours before the money runs out, to keep the lights on until December 3.
Safe havens advanced amid the uncertainty.
Against the yen, the dollar was trading at JPY111.50, down from JPY111.85 late Wednesday. Gold was quoted at USD1,760.78 an ounce at the London equities close Thursday, up against USD1,732.75 at the close on Wednesday.
Stocks in New York were mostly lower at the London equities close, with the DJIA down 0.8%, the S&P 500 index down 0.4%, and the Nasdaq Composite up 0.1%.
In London, dragging on the FTSE 100 was British American Tobacco, closing down 4.8%. The cigarette maker went ex-dividend, meaning new buyers no longer qualify for the latest payout.
Royal Mail extended losses, ending down 3.6% as it continued to reel from a Wednesday downgrade to Sell from Buy at UBS.
Buoyed by a ratings upgrade, meanwhile, was Anglo American. The miner bounced 2.6% after RBC upgraded the stock to Outperform from Sector Perform.
It was a strong London debut from Oxford Nanopore Technologies, with shares soaring to 612.60 pence following its float on the Main Market of the London Stock Exchange on Thursday.
Oxford Nanopore priced its initial public offering at 425p per share, giving a market capitalisation of around GBP3.4 billion. It ended the session worth nearly GBP4.9 billion.
The Oxford University spin-out is a technology commercialisation specialist focused on DNA and RNA strand sequencing. Unconditional dealings begin on October 5.
Shares in Boohoo tanked 15% after the online retailer not only warned that Covid-19 is still hitting consumer demand, but it also cautioned on rising costs as inflationary pressures accelerate.
Profit in the six months to the end of August dropped by almost two-thirds, despite revenue climbing as sales reaped the rewards of market share gains in the US and UK. Pretax profit fell 64% to GBP24.6 million, from GBP68.1 million a year earlier, while operating costs during the half increased by a quarter to GBP448.2 million from GBP359.5 million a year prior.
Adjusted earnings before interest, tax, depreciation and amortisation margins guidance has been lowered. The AIM stock now expects full-year adjusted Ebitda margins between 9.0% and 9.5%, the range lowered from 9.5% to 10% previously. The adjusted Ebitda margin for the first half was 8.7%, down from 11.0% a year earlier and 10.8% from pre-pandemic times.
The corporate calendar on Friday has full-year results from pub operator JD Wetherspoon.
Friday's economic calendar has Japanese unemployment at 0030 BST, German retail sales at 0700 BST and eurozone inflation at 1000 BST. The day will be dominated by a raft of manufacturing PMIs, due from Ireland at 0101 BST, Germany at 0855 BST, the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.
By Lucy Heming;Â lucyheming@alliancenews.com
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