Sun, 26th May 2019
The FTSE 100 fell to a two month low on Monday, as fears mounted over inflation and rising bond yields. The UK’s leading index fell by 1.1 percent on Monday, while the FTSE 250 fell by 1.3 percent. The FTSE 100 has fallen by more than four percent this year, in part because of the pound’s steady recovery from post-Brexit lows.
Companies that take their earnings in dollars have seen their stock prices boosted by the weak pound, because their balance sheets look better when the earnings are converted in to other currencies.
On Monday, the UK’s leading index was on track for its fifth day of consecutive losses. This makes for the longest losing streak for the index since November. Only a small number of stocks were showing gains. The equity nervousness is related to both tighter Fed policies, as well as some re-pricing for higher yields.
Asian shares fell as well, dropping by the greatest amount in over a year, as fears surfaced over a resurge in inflation, leading to falls in Wall Street. There are concerns that there may be a global tightening of policy by central banks.
Anglo American and Glencore were some of the standouts of the day, gaining 1 percent and 0.3 percent thanks to a rebound in the price of basic materials. Randgold reported that 2017 profits were up by 14 percent, thanks to an increase in production, and that they would be doubling their annual dividend payout.