By Johann M Cherian and Shristi Achar A
(Reuters) -Britain’s blue-chip index posted its biggest weekly loss in over two months on Friday as weak domestic retail sales data and hawkish rhetoric from major central banks fuelled recession worries.
The FTSE 100 fell 1.3% to a one-month closing low, pulled lower by oil and gas and healthcare sectors.
Global stocks extended losses after the U.S. Federal Reserve, the European Central Bank and the Bank of England raised interest rates by 50 basis points earlier this week and signalled there were more rate hikes on the horizon despite signs of slowing economic growth.
Data on Friday showed British retail sales slid unexpectedly in November, while another set suggested the downturn across most businesses eased slightly in December, but economic activity remained below the 50 threshold denoting growth.
“The flash PMIs are consistent with our view that the UK economy is probably in a recession, although a relatively shallow one at the moment,” said Ashley Webb, UK economist at Capital Economics.
“While the price indices suggest that inflation continues to ease, they still remain high by past standards.”
UK’s midcap FTSE 250 shed 1.6% to touch five-week low and is down over 20% so far this year. Thee exporter-heavy FTSE 100, however, is down less than a percent, supported by stronger commodity prices and a weaker sterling.
“When you look at the UK markets this year, it has been very resilient, thanks to heavy commodities and defense stocks,” said Roland Kaloyan, head of European equity strategy at Societe Generale.
“Looking into 2023, first part of the year would be very challenging for UK equities because of central banks, inflation and challenging news from Chinese reopening. From Q2,central banks could pause, which would be a support for equities.”
Homebuilders dropped 2.7% after mortgage lender Halifax said it expected British house prices to fall next year by around 8%.
Games Workshop soared 16.1% after e-commerce giant Amazon agreed to produce film and television content with the British game operator.
(Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Savio D’Souza, Sherry Jacob-Phillips and Tomasz Janowski)
