UK shares drop the most in 7 months on inflation woes; THG shines

(Reuters) – British stocks clocked their worst day since late October on Tuesday after a sudden drop in big U.S. tech stocks over inflation concerns, while shares of THG Plc eyed their best day on record on raising more than $1 billion in new equity.

FILE PHOTO: Signage is seen outside the entrance of the London Stock Exchange in London, Britain. Aug 23, 2018. REUTERS/Peter Nicholls

The blue-chip index slid 2.6%, dragged down by heavyweight banks, life insurers and miners.

All the FTSE 100 constituents were trading in negative territory.

The domestically focused mid-cap FTSE 250 index tripped 2.3%.

Travel and leisure stocks slipped 4.0%, with British Airways owner IAG falling the most, after it launched an 800 million euro ($971.52 million) convertible bond due in 2028 to strengthen its balance sheet.

Globally, tech stocks took a beating as investors braced for U.S. inflation data due on Wednesday, while keeping a close eye on a host of Federal Reserve speakers this week to assess how authorities are likely to respond to receding risks posed by the coronavirus pandemic in some major economies. [MKTS/GLOB]

“With China and the U.S., the world’s two largest economies, showing signs of rising inflationary pressures, investors are getting nervous,” said Sophie Griffiths, Market Analyst, UK & EMEA, at ONANDA.

“The overriding fear is that pandemic stimulus combined with reopening economies will spark a sharp drive high in inflation, forcing central banks to take action, tightening policy and potentially slowing down economic recovery.”

The FTSE 100 has gained about 7.2% year-to-date on optimism that speedy COVID-19 vaccinations and constant policy support from the government would drive a stronger economic recovery.

Beauty and lifestyle e-commerce company THG surged 11.7% after it raised more than $1 billion in new equity, including $730 million from Japan’s Softbank Group. [nL4N2MY1HU]

NatWest slid 3.5% after the UK government completed a 1.1 billion pound ($1.55 billion) share sale at a discounted price. [nL8N2MY1LI]

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