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Shares fall on inflation fears; Tesco holds up as retail sales dip

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4.30pm: Markets fall

Stock markets took a hammering today with the FTSE 100 closing 135.96 points (1.9%) lower at 7,017.47.

Investors took flight over heightening concern of interest rate hikes to curb rising inflation.

Wall Street also felt a cold draught as the Dow Jones fell by more than 383 points in early trade and the S&P 500 dropped around 39. The tech-laden Nasdaq lost more than 108 points.


8.15am: Blue chips dip

The FTSE 100 slipped by about 14 points at the open in line with forecasts and was last trading at 7,151.72, down just −1.71 points (0.024%).


7am: Tesco holds up

Tesco

Supermarket group Tesco kept guidance unchanged after reporting a small rise in first quarter like-for-like sales, up 1% to £13.3bn for the 13 weeks to 29 May.

Trading benefited form increased consumption at home during March, but slowed down in April and May as restrictions eased.

On a two-year basis, before the pandemic struck, sales were up 8.1%. UK sales rose 0.5% to £10bn.

Online demand remained high at 1.3m orders per week with two-year sales growth of 81.6%; one-year sales growth of 22.2% reflected annualisation of surge in capacity in April last year

“Our profit guidance from April remains unchanged. While the market outlook remains uncertain, I’m pleased with the strong start we’ve made to the year and continue to be excited about the many opportunities we have to create value over the longer term,” said chief executive Ken Murphy.

Edinburgh-based Tesco Bank saw income decline 10% although there was growth later in the quarter as it begins to benefit from the acquisition of Ageas’s 50.1% stake in Tesco Underwriting.


Retail sales fall

The Office for National Statistics charted a surprise 1.4% fall in retail sales between April and May.

Demand was sharply lower for groceries, as pubs and restaurants reopened to indoor customers.

“Anecdotal evidence suggests the easing of hospitality restrictions had an impact on sales as people returned to eating and drinking at locations such as restaurants and bars,” the ONS said.


Global markets

The FTSE 100 was expected to open lower ahead of next week’s Bank of England meeting on interest rates.

On Wall Street the Dow Jones remained on course for a second successive weekly decline, while the Nasdaq finished higher and likely to see a fifth successive weekly rise.

In Asia the Bank of Japan left monetary policy unchanged. The Nikkei 225 slipped 0.03% while South Korea’s Kospi lifted 0.14%.

The Shanghai Composite in China dipped 0.56% and Hong Kong’s Hang Seng index rose 0.58%



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