London’s FTSE 100 sheds early gains after worrying US inflation numbers

London’s FTSE 100 shed all its early gains today after a hotter than expected US inflation report sent investors wobbling.

The capital’s premier index slumped 1.17 per cent to 7,385.86 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, slid 1.78 per cent to 19,167.21 points.

The indexes has kicked off the day in a reasonably positive style. However, a new stateside inflation report released in the afternoon triggered an immediate tumble.

FTSE 100 tanked after US inflation numbers

Wall Street also grappled with a downward spiral on the report, which revealed prices climbed 8.3 per cent over the year, much higher than analysts’ forecasts.

The tech-heavy Nasdaq, S&P 500 and Dow Jones all lost around three per cent during the early session in New York.

The numbers raised bets on the Federal Reserve hiking interest rates 75 basis points for the third time in a row, weighing on stocks.

Those expectations sent the pound plummeting against the US dollar, losing over one per cent. Higher rates tend to boost currencies.

London’s FTSE 100 was dragged down Britain’s biggest supermarkets tumbling on fears of a spending slow down.

New figures from research firm Kantar showed households are beginning to trade down to cheaper alternatives, expanding German discounters Aldi and Lidl’s market share.

A weak trading update from middle-class favourite and online supermarket Ocado, in which it said margins are thinning, sent its shares down over 14 per cent and to the bottom of London’s FTSE 100.

“Ocado’s latest update on its UK retail business provides further evidence of the current cost-of-living pressures,” Russ Mould, investment director at broker AJ Bell, said.

Rivals Sainsbury’s and Tesco also hovered near the bottom of the FTSE 100.

Oil prices fell nearly two per cent.

European shares also fell, with the Stoxx 600 and Dax 40 down around 1.6 per cent.