The FTSE 100 endured a glum session of trading on Tuesday as the cost of living crisis encroached on all sides, setting investors up for a pessimistic outlook on the horizon.
Strikes across sectors from the post office to barristers have highlighted the emerging depth of the UK’s trouble, with the energy crisis set to deepen as UK households face a devastating winter ahead.
The blue chip index reflected the depressing outlook with a 0.4% drop to 7,502.3 in late morning trading.
“The FTSE 100 was under pressure on Tuesday amid a gloomy global market outlook,” said AJ Bell investment director Russ Mould.
“Warnings of a ‘catastrophic’ winter energy crisis in the UK from EDF will do little to lift a dark consumer mood on these shores.”
US markets
Markets across the Atlantic remained flat after heavy losses on Monday, as analysts noted the upcoming Jackson Hole summit was certain to bring grim news for the market in the spectre of higher interest rate hikes.
The NASDAQ was stagnant at 12,913 in pre-open trading, with the S&P 500 and Dow Jones flat at 4,143.5 and 33,079, respectively.
“The hopes earlier in the summer that inflation might have peaked, and the Federal Reserve might, in turn, ride to the market’s rescue, are looking increasingly forlorn,” said AJ Bell investment director Russ Mould.
European energy crisis
European markets also braced for Russian maintenance on the Nord Stream 1 pipeline which connects the country to Germany, sending prices through the roof across the continent.
Gas supplies through the pipeline are set to grind to a halt from 31 August to 2 September.
“European natural gas prices saw a renewed surge after unscheduled ‘maintenance’ works by Russian state energy operator, Gazprom, on the pipeline which links Russia and Germany,” said Mould.
“It seems likely this is an attempt by the Kremlin to remind Europe of its leverage as the war in Ukraine continues to rage and sanctions against Russia continue to bite.”
The German DAX was flat at 13,229, the French CAC dipped 0.1% to 6,372.4 and the Italian FTSE MIB rose 0.6% to 22,299.5.
BT
BT shares enjoyed a 1.2% climb to 158p after the UK government confirmed it would take no action against Altice UK Sarl’s increased stake in the company.
The telecommunications group had been under the magnifying glass following Altice UK Sarl’s raised stake to 18% from 12% in December 2021, sparking concerns of an attempted takeover.
The group said it had no intention of mounting a takeover, and would be bound by its statement under UK company law.
“BT shares crept up following relief that the UK Government won’t make major shareholder, French billionaire Patrick Drahi, sell any of his 18% stake after a review on the grounds of national security,” said Mould.
“However, the whole affair is a reminder of the sensitivities around critical national infrastructure and the implications this could have for BT’s future strategy.”
