Yesterday, the FTSE100 fell by 0.3%, as investors adjusted their portfolio due to expectations of a tighter monetary policy caused by the surge in energy prices. Resources and energy outperformed in the UK.

Banks and commodity stocks are dragging the FTSE 100 down this morning. The blue-chip index is down 0.9%. Supply chain disruptions, a shortage of truck drivers and the threat of stagflation are also on investors’ minds. And let’s not forget the talks about the U.S. debt ceiling and Joe Biden's trillion dollar spending plan. Bond yields keep rising, stocks are flat and energy costs are soaring... The list goes on... 

On the corporate side, beverage company Diageo said it will invest $500 million to increase its tequila production capacity in Mexico. Meanwhile, online electricals retailer AO World Plc dropped by more than 20% after it said that revenue growth in the first half of the year was hit by supply chain disruptions.

Things to read:

UK Businesses warn of “autumn storm” of shortages, costs and taxes (Financial Times)

Power-Starved UK Gets First Undersea Supply From Norway (Bloomberg)

Powell Says Fed Faces “Difficult Trade-Off” if Inflation Doesn’t Moderate (Wall Street Journal)