The FTSE 100 was impacted by falling oil prices on Wednesday, sending the blue chip index deep into the red.
Brent crude fell 3.6% to $95 per barrel on rising recession concerns, with oil giants spiralling to the bottom of the index.
Shell shares slid 3.5% to 2,257.5p and BP shares dropped 3.5% to 433.2p.
Utilities companies took a hit, with National Grid shares falling 4.1% to 1,077.5p, Centrica decreasing 2.3% to 74.7p and SSE decreasing 2.5% to 1,668p.
Food prices accelerate
Food prices continued to accelerate at alarming rates, exacerbating cost of living fears as households across the UK faced the horrible decision between heating and eating as grocery and energy prices crushed consumer budgets from all sides.
“Food price inflation continues to be an accompanying problem to soaring energy bills with the latest data revealing, somewhat alarmingly, that prices for fresh food are rising at their fastest level since the Great Financial Crisis,” said Mould.
Tesco shares fell 0.8% to 248.9p, Sainsbury’s slid 0.8% to 204p and Associated British Foods dropped 1.8% to 1,513.7p.
US Futures Steady
Meanwhile, US futures seemed steady despite US Fed chair Jerome Powell’s hawkish stance at the Jackson Hole convention last week, with aggressive interest rate hikes looming on the horizon.
“The big economic announcements later this week come from the US and include PMI figures and the latest jobs report,” said Mould.
“While both are typically influential on markets, this time round the firmness of Federal Reserve chair Jerome Powell’s hawkish stance at Jackson Hole means it could take a real surprise to alter the market’s trajectory.”
The Dow Jones was flat at 31,777 in pre-open trading, with the S&P 500 gaining 0.1% to 3,994.7 and the NASDAQ climbing 0.6% to 12,437.7.
European Markets
European markets opened to a rough day of trading after Russian energy group Gazprom turned off the tap for Nord Stream 1 to Germany.
The shutdown was announced earlier in August, with the company citing maintenance works as its reason for gas flow suspension. The move sent markets into decline as Europe braced for three days without gas supplies from Russia.
The German DAX dropped 0.6% to 12,882.6, the French CAC fell 0.9% to 6,153.7 and the Italian FTSE MIB slid 0.8% to 21,644.7.
However, some good news arrived as analysts noted European countries were stockpiling energy for winter ahead of schedule, easing some pressure from the continent ahead of a difficult season.
“A fall in wholesale gas prices yesterday, as European storage targets were met early, provided some hope that the current energy crisis might ease slightly,” said AJ Bell investment director Russ Mould.
“However, as we move out of the summer period into autumn and winter the pressures here are only likely to get more acute.”