UK midcaps end at two-month lows in dour start to new quarter
By Shashank Nayar, Bansari Mayur Kamdar and Amal S
(Reuters) -British mid-cap stocks closed two-month lows on Friday, as warnings from electrical goods retailer AO World and pub operator J D Wetherspoon stoked concerns around supply chain disruptions and higher energy prices.
The domestically focussed mid-cap index ended 0.3% lower to record its worst week since October last year, hurt by declines in travel and leisure stocks.
The blue-chip FTSE 100 index lost 1.0% as a stronger pound pressured the dollar earners on the index.
AO World plunged 24.3% after first-half revenue was hit by a shortage of delivery drivers, while Wetherspoon gained 2.5% despite a near doubling in its annual losses.
“In the United Kingdom, there has been an alarming drop in business confidence in the space of a month, with the optimism engendered by the vaccine roll-out feeling like a distant memory amid a fuel, supply chain and cost of living crisis,” said Russ Mould, investment director at AJ Bell.
However, a rise in cost pressures from supply chain disruptions and higher energy prices have weighed on UK’s economy, putting the mid-cap index on track to post its fourth consecutive weekly decline.
There is going to be some further economic recovery and some further gains in equity markets, but from now on, gains will be relatively small as the recovery pace in the United States and China is expected to slow, said Franziska Palmas, market economist at Capital Economics.
Among other stocks, software company Sage fell 1.3% after saying it will cut more than 800 jobs across the world.
GlaxoSmithKline dropped 1.3% after ending collaboration with Germany’s Merck KGaA on cancer treatment.
(Reporting by Bansari Mayur Kamdar and Amal S; Editing by Sriraj Kalluvila and Uttaresh.V)