FTSE 100 to be dashed again by inflation fears after fresh Wall Street sell off

The FTSE 100 is set to start Thursday on the backfoot after American equities again suffered a bloody nose. CFD and spreadbetting firm IG Markets sees London’s blue-chip benchmark down around 60 points, making a price of 6,942 to 6,945 with just over an hour to go until the open. After stocks dropped earlier this week on the sentiments and indirect indicators of inflation this latest sell-off was preceded by a spike in the US consumer price index (CPI), which jumped to its biggest increase for nearly fifteen years. New York’s Dow Jones fell 681 points or 1.99% on Wednesday to close at 33,587 whilst the S&P 500 similarly dropped 2.14% down to 4,063. The Nasdaq gave up 357 points or 2.67% to finish Wednesday’s trading at 13,031. Small Cap focussed Russell 2000 index fell further still, losing 3.26% to end the day at 2,135. “Federal Reserve vice chair Richard Clarida expressed some surprise at how big the jump was in yesterday’s inflation numbers, but still insisted that the moves higher in prices were transitory in nature,” said Michael Hewson, analyst at CMC Markets. “Fears about overheating seem somewhat premature at this time given the disruption wrought by the pandemic and the price disruptions of the past 12 months. There is no question we’ve seen some big gains in commodity prices over the past 12 months.” He added: “While concerns about inflation are continuing to dominate investor concerns, there is unlikely to be any respite with the latest US PPI numbers for April due to be released this afternoon.” Producer price index (PPI) readings are typically leading indicators for consumer prices, as the rise in ‘factory gate’ pricing tends to be passed straight down to the consumer further down the supply chain – so its possible that the stock market volatility triggered by inflation won’t abate just yet. In Asia, Japan’s Nikkei shed 600 points or 2.13% to change hands at 27,548 and Hong Kong’s Hang Seng dropped 1.29% to 27,865. The Shanghai Composite index lost just over 1% to 3,426. Around the markets The pound: US$1.4063, up 0.06% Gold: US$1,817 per ounce, down 0.02% Silver: US$27.02 per ounce, down 0.4% Brent crude: US$68.57 per barrel, up 0.02% WTI crude: US$65.33 per barrel, up 0.07% Bitcoin: US$51,077, down 11%