UK stocks dropped in early trading after heavy falls overnight in the US following 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 and it could reduce its balance sheet, effectively stopping the market purchases of Treasury bonds which have helped support risk assets.
Treasury yields spiked, 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.
At 9.45am the FTSE 100 was down 43 points or 0.6% to 7.474 points with software and media stocks leading the decline while retailers eked out gains after several positive earnings reports.
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Variety goods value retailer B&M European Value (BME) was a winner, in contrast, gaining 2.5% to 650p after it 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.
Online women's fashion brand Sosandar (SOS) posted a strong trading update for the first quarter to December with sales up 122% on the same period last year, sending shares up 3% to 32.5p.
The firm cited record trading with third parties M&S (MKS), Next (NXT) and John Lewis, following significant investment in stock depth and breadth, for the jump in revenues.
Shares in Next itself, the UK’s largest clothing retailer, dipped 0.8% to £79.72 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.
Shares in sausage roll purveyor Greggs (GRG) were also lower, easing 1.5% to £33.23, even though the firm posted higher like for like revenues on a two-year basis to the end of December.
Shares in media agency M&C Saatchi (SAA) jumped 7% to 203p, 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 386p 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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