Inflation and recession fears drag London markets lower

London’s markets slumped again as traders continue to fret about a global recession and a concerning inflation outlook.

UK CPI (Consumer Prices Index) inflation slowed slightly last month, according to official data, but it remains uncomfortably high for traders still expecting significant increases in interest rates.

US markets moved higher upon the opening bell but failed to arrest the downturn elsewhere.

The FTSE 100 ended the day down 108.56 points, or 1.47%, at 7,277.3.

“US markets might have managed a little rebound, but European markets haven’t even managed that,” said Chris Beauchamp, chief market analyst at IG.

“Even a bounce in oil hasn’t done much for the FTSE 100, as fears of a global recession and concerns about the overall weaker outlook for Europe mean that investors are even less keen to buy the dip here than they are in the US.”

Elsewhere in Europe, German stocks were also week as the Government mulls the nationalisation of natural gas importer Uniper, pulling energy firms down in value.

The German Dax declined 1.17% by the end of the session and the French Cac finished 0.42% lower.

Meanwhile, sterling was in the red despite the CPI improvement amid another rise in core inflation, but moved slightly off intra-day lows.

The pound was down 0.14% against the dollar at 1.156 and was 0.1% lower against the euro at 1.157 at the close.

In company news, homeware retailer Dunelm closed higher after it reported that annual profits leapt nearly a third higher to a new record.

The group reported that pre-tax profits jumped 32.4% to £209 million on a pro forma 52-week basis, up from £157.8 million the previous year.

Shares increased by 25p to 748p despite the company highlighting an “extremely challenging” wider economic backdrop.

Naked Wines suffered a headache after the online retailer warned it is reviewing its plans for the next 18 months and saw a director leave after only three weeks in the job.

The firm, which connects shoppers with wine makers, said it is trying to “address” the credit facility which allows it to borrow money from its banks.

Naked slid by 54.7p to 90.4p at the end of the session.

Elsewhere, luxury car manufacturer Aston Martin declined after reports in the Financial Times that the business is facing a £150 million lawsuit from two former car dealers.

Shares fell by 3.55p to 153.7p after Nebula Project AG, a firm run by Andreas Baenziger and Florian Kamelger, reportedly filed a case against Aston Martin.

Shares in Abrdn fell by 6.9p to 142.3p after brokers at Deutsche Bank downgraded the stock from “hold” to “sell”.

The price of oil gained ground after US crude oil inventories were recorded at their lowest levels since 1984.

Brent crude oil increased by 2.03% to 95.06 US dollars per barrel when the London markets closed.

The biggest risers in the FTSE 100 were Scottish Mortgage Investment Trust, up 19.6p at 827p, Haleon, up 3.7p at 270.3p, Pershing Square, up 30p at 2,800p, Shell, up 13.5p at 2,341p, and Whitbread, up 6p at 2,669p.

The biggest fallers in the index were Ocado, down 56p at 623.2p, Abrdn, down 6.9p at 142.3p, Berkeley, down 163p at 3,475p, Schroders, down 108p at 2,546p, and Melrose, down 4.85p at 116.75p.