- UK economy posts surprise growth in May
- Risk averse mood prevails ahead of U.S. CPI
- J D Wetherspoon heads towards March 2020 lows
- FTSE 100 down 1.2%, FTSE 250 off 0.6%
July 13 (Reuters) - UK's blue-chip FTSE 100 fell more than 1% on Wednesday in a wider market selloff ahead of a crucial U.S. inflation data, with a surprise growth in Britain's economy failing to assuage recession worries.
The FTSE 100, which houses several global companies that draw a large part of their revenue in dollar, dropped 1.2% as sterling edged higher.
Data showed Britain's economy grew unexpectedly in May, driven by a rise in doctor appointments and demand for holidays, likely reassuring the Bank of England about its plans to keep on raising interest rates.
"The GDP figures are likely to get worse over the coming months as pressures continue to mount on consumers and businesses," Dan Boardman-Weston, chief investment officer at BRI Wealth Management said in a note.
"The Bank of England is already predicting the chance of a recession but feels forced to raise interest rates to avoid inflation expectations becoming entrenched."
The wider European markets fell sharply ahead of U.S. data expected to show inflation hit a fresh 40-year high, putting pressure on the Federal Reserve to hike rates aggressively.
The domestically focussed FTSE 250 index slipped 0.6%, with pub operator J D Wetherspoon sliding 8.2% after it warned of losses this year due to higher labour and marketing costs.
Its shares were heading towards their lowest price since March 2020, when coronavirus pandemic fears hammered markets. Peers Mitchells & Butlers and Marston's slipped more than 1% each.
"The difficulty now, for the entire pub sector, is that drinking and eating at home looks to be sticking around longer," Matt Britzman, equity analyst at Hargreaves Lansdown.
"That trend is likely to continue as the cost-of-living crisis looks poised to accelerate the tightening of purse strings."
Asset manager Abrdn fell 3.7% after Barclays downgraded the stock to "underweight".
Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur
Source: Reuters