UK stocks gave back roughly half the ground they had made this year on Thursday as markets reacted to the release of minutes from the latest Federal Reserve meeting.
The Fed, as it is known, signaled it could move earlier than expected to raise rates and tame inflation as well as reducing its balance sheet, effectively stopping the market purchases of Treasury bonds which have helped support risk assets.
Treasury yields spiked overnight, sending stocks - in particular those in the technology sector - sharply lower. Losses were carried over into the Asian session with a fall of nearly 3% for Japan’s Nikkei index.
Although stocks rallied over lunchtime, by the close the FTSE 100 was down 67 points or 0.9% at 7,450 points with software and industrial stocks leading the decline while banks moved up on the prospect of higher rates.
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Variety goods value retailer B&M European Value (BME) reversed its early gains to trade down 2.3% at 620p despite having raised its full year profit guidance following a strong third quarter to December 25 which saw it increase sales by 14% on a two-year like-for-like basis.
Shares in Next (NXT), the UK’s largest clothing retailer, also fell sharply down 3.6% to £77.70 despite the firm raising its full year earnings guidance for the fifth time in 10 months.
The firm, which trades from 500 physical stores as well as online, said full-price sales in the eight weeks to Christmas day were 20% higher than last year. That compared with forecasts of a 10% rise.
Online women's fashion brand Sosandar (SOS) bucked the trend, posting a strong trading update for the first quarter to December with sales up 122% on the same period last year which lifted the shares 1.5% to 31.75p.
The firm cited record trading with third parties M&S (MKS), Next and John Lewis, following significant investment in stock depth and breadth, for the jump in revenues.
Shares in sausage roll purveyor Greggs (GRG) were down a whopping 8% to £31, even though the firm posted higher like for like revenues on a two-year basis to the end of December.
Given the stellar run in the shares in the last month, it seems investors were selling today's good news and banking their profits as 2022 is still likely to present retailers with plenty of headaches.
Shares in media agency M&C Saatchi (SAA) jumped 9% to 230p, building on their 12% rally yesterday, after the board confirmed it had received an approach from a firm connected to Vin Murria, one of its directors.
The firm said no proposal had been received yet but the board had been told by AdvancedAdvT, a special purpose acquisition vehicle chaired by Murria, ‘to expect one in the near term’.
Shares in fashion brand Dr Martens (DOCS) fell 8.5% to 385p after private equity firm Permira sold 65 million shares at 395p raising £257 million in proceeds.
The sale leaves Permira with roughly 364 million shares or 36.4% of the issued share capital.
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