Oil FTSE 100 Gains, Mining Shares Rise; Asos decline on profit warning
- Asos tumbles on 2022 earnings warning; CEO resigns
- BoE hints at “significantly earlier” rate hikes
- Oil stocks jump to March 2020 highs
- FTSE 100 up 0.7%, FTSE 250 down 0.2%
Oct. 11 (Reuters) – The UK’s FTSE 100 climbed on Monday, helped by weighty mining and energy stocks, as a pound stronger thanks to rising inflation and bets on a rate hike interest has limited additional earnings.
Inflation is back on investor radar after Bank of England (BoE) policymaker Michael Saunders told households to prepare for interest rate hikes “much sooner,” and the governor Andrew Bailey said inflation above target was a concern. Read more
Stuart Cole, head of macroeconomics at Equiti Capital, said the problem policymakers face is that sources of inflation that previously seemed temporary were becoming sustainable.
The blue-chip FTSE 100 Index (.FTSE) ended 0.7% higher and recorded its third consecutive session of higher, with Royal Dutch Shell (RDSa.L), BP (BP.L), Anglo American (AAL.L) and Rio Tinto (RIO.L) among the best winners.
The pound strengthened 0.2%, limiting the gains of the export-focused FTSE 100.
Banks (.FTNMX301010) added more than 2.2% as bond yields surged on the curve after Bailey said he was concerned about inflation exceeding the BoE’s 2% target. The benchmark 10-year bond yield reached its highest level since May 2019.
The FTSE 100 has risen around 10% so far this year thanks to relaxed central bank policies and reopening optimism, but the pace of gains has recently slowed as investors straddle the barrier between the rise in inflation and rising rates and constant gains in mining and energy. stocks on high commodity prices.
Oil stocks (.FTNMX601010), which have gained around 37% this year, hit their highest level since March of last year to recoup most of the losses caused by the pandemic. Mining stocks (.FTNMX551020) marked their best session since July.
Meanwhile, the domestically-focused mid-cap index (.FTMC) fell 0.2%, with consumer discretionary stocks among the worst performing.
Online clothing store ASOS (ASOS.L) fell 13.4%, hitting a 17-month low, after parting ways with CEO Nick Beighton and warned that higher logistics costs and disruption to the supply chain could force 2022 profits to fall by more than 40%. Read more
Reporting by Bansari Mayur Kamdar and Amal S; Editing by Subhranshu Sahu and Andrew Heavens
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