The FTSE 100 was steady on Thursday as investors continued to digest the latest raft of economic data and accessed the implications of higher borrowing costs in the coming months.

The FTSE 100 was down just 0.1% to 7,888 at the time of writing on Thursday. The index has traded in a tight trading range between 7,880-7,920 for most of this week.

Higher UK inflation, better Chinese growth and a mixed US jobs market have presented a complex macroeconomic picture for traders.

“The decline in miners, packaging groups and retailers on the UK stock market would suggest investors are once again worried about the outlook for the global economy. Markets have stalled over the past few days, with the latest corporate updates failing to move the dial,” said Russ Mould, investment director at AJ Bell.

“A lot of companies are keeping their heads above water but there remain plenty of headwinds to cloud the outlook. The prospect of another round of interest rate hikes in the US and Europe will further increase the cost of borrowing, coinciding with fears that banks are going to have stricter lending policies following the recent Silicon Valley Crisis. Tighter lending could feasibly lead to weaker economic activity.”

FTSE 100 risers

Segro was the standout performer on Thursday after the industrial property company said they were enjoying a strong start to the year.

“2023 has started well for SEGRO,” said David Sleath, Chief Executive.

“Occupier demand continues to be high and is coming from a diverse range of customers, whilst supply remains limited across all our markets. These favourable dynamics, combined with the active asset management of our prime portfolio, have enabled us to drive strong rent roll growth from the leasing of recently completed space and the capture of reversion and indexation from our standing assets.”

Segro shares were trading 3.65% higher at the time of writing.

Consumer health company Haleon rose 3.2% after reporting 9.9% economic growth in the first quarter. The respiratory business unit accounted for a large proportion of their growth with a 33% organic sales increase.

FTSE 100 fallers

Excluding Melrose, which may be showing as a loss on some pricing systems (or a substantial gain) following their demerger of GKN assets and stock consolidation, Antofagasta was the top faller, down 3%.

The copper miner released an underwhelming production report yesterday and was caught up in a general selloff of miners.

Anglo American was 2% weaker.

Housebuilders have ebbed away this week as the possibilty of higher borrowing costs dampens interest in the sector. Persimmon was down 2% and Taylor Wimpey edged down 1.7%.

Tesla shares fell in US trade yesterday as the electric vehicle maker reported a material compression in operating margins and a slump in cash generation due to a broad price reduction.

Tesla has slashed the price of their vehicles in an attempt to attract more customers. After a series of price cuts over the past year, the Model 3 now starts at less than $40,000.

Increasing competition would have been a factor in deciding to build market share on pricing as traditional automakers ramp up investment in their EV offerings. Tesla has been seen as a premium brand, and the move to lower prices will diversify their customer base before traditional car makers snatch share in the budget area of the market.

“Tesla is still an aspirational brand in the USD 60,000-120,000 range. EVs from traditional premium automakers are still playing catch-up with Tesla in terms of performance and the overall user experience,” said Orwa Mohamad, Analyst at Third Bridge.

The move has shown early signs of success with robust revenue figures. Revenue for Q1 2023 was 24% higher than the year prior at $23.3bn – but was lower than the $24.3bn generated in Q4 2022.

Operating margins in Q1 were 11.4% compared to 19.2% a year ago.

The prospect of lower operating margins for the foreseeable future was the overriding factor in sending Tesla shares down 7% in the pre-market.

“Margins were always going to be in the driving seat when it came to determining market sentiment this quarter, following Tesla’s sixth round of price cuts in the US this year,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“While the group’s valuation is in a more reasonable position than it has been, it’s still vulnerable. A large reason for this is it’s unclear where margins are going to settle as price cuts continue to come through the line, the extent of which can’t be fully mapped at this point, and which could see margins losing further traction.”

UK stocks started the day deep in the red following the release of UK inflation data which raised the prospect of additional rate hikes by the Bank of England.

London’s leading index recovered some of the losses throughout the session and was trading down just 0.2% at 7,893 at the time of writing. The index had touched lows of 7,871 earlier in the session.

The more UK-focused FTSE 250 was down 0.6%. Most other major European equity indices were in positive territory.

The decline in UK stocks was sparked by worries about the next move by the Bank of England’s voting committee which will now have to factor in UK inflation at 10.1% – higher than economist’s estimates.

“The Bank of England remains under pressure to keep a lid on inflation, so we can’t rule out another rate rise in May,” said Sarah Coles, head of personal finance, Hargreaves Lansdown.

Markets quickly priced in additional rate hikes to interest rate futures.

FTSE 100 risers

British American Tobacco was the FTSE 100’s top riser on Wednesday after the tobacco company said they expected organic revenue growth of 3-5% in the year ahead. It also noted sharp growth in their non-combustibles business which now accounts for around 15% of revenue.

British American Tobacco shares were 3.5% higher at the time of writing. Imperial Tobacco jumped on BATS’ coattails and rose 2%.

FTSE 100 fallers

Fresnillo fell 2% as the possibility of higher interest rates sapped interest for precious metals. The silver miner fell as gold retreated 0.2% and silver reversed sharp losses to trade 0.1% higher.

Higher inflation driven by soaring food prices is a source of concern for the UK’s shoppers who will likely steer away from Ocado’s premium online shopping services. Ocado shares were down 2% on Wednesday as investors steered away from their equity.

Oil prices were down around 2% on Wednesday making BP and Shell less attractive – BP was down 2% while Shell slipped 0.8%.

Investors are now questioning whether Woodbois (LON:WBI) will survive one of its lenders asking for its money back?

The £9m market capitalised business is involved in Africa-focused forestry, timber trading and afforestation.

Sydbank, which has provided various banking arrangements to Woodgroup ApS, a group wholly owned subsidiary, has called in the $6m debt facility.

Having a floating charge against the subsidiary assets, which include a $3.1m cash balance, Sydbank has heavy power against the company. The cash will be immediately used to offset part of the $6m facility.

Woodbois has until the end of May to come up with a method or a scheme for the repayment of the $2.9m balance.

The group’s broker Canaccord Genuity has placed its rating on the group’s shares as “Under Review” so that worries investors even more than the sudden totally unexpected cash demand.

Restructuring advisers have been called in and the group is undertaking a “concerted contingency planning exercise” – understandably in reaction the group’s shares have collapsed this morning by some 65% to 0.36p after hitting 0.22p earlier.