(For a Reuters live blog on U.S., UK and European stock
markets, click or type LIVE/ in a news window)
* UK economy posts surprise growth in May
* U.S. June inflation at 9.1% vs expectation of 8.8%
* J D Wetherspoon falls to March 2020 lows
* FTSE 100 down 0.7%, FTSE 250 off 0.8%
July 13 (Reuters) - UK's blue-chip FTSE 100 fell on
Wednesday after hotter-than-expected U.S. inflation data slammed
global markets, while a surprise growth in Britain's economy
failed to assuage recession worries.
The FTSE 100, which houses several global companies
that draw a large part of their revenue in dollars, dropped 0.7%
as sterling edged higher.
Data showed Britain's economy grew unexpectedly in May,
driven by a rise in doctor appointments and demand for holidays,
that could reassure the Bank of England about its plans to keep
on raising interest rates.
Meanwhile, hotter-than-expected U.S. inflation data fanned
fears that the Federal Reserve might take a more aggressive
stance on rate hikes, potentially tipping the world's largest
economy into a recession.
"We can now expect a 50bps hike being delivered from the BoE
next month and pressure to grow on the ECB (European Central
Bank) to do the same," said Stuart Cole, head macro economist at
"It puts pressure on both to be more aggressive in their
attempts to bring inflation back under control, with 25bps hikes
now seen as inadequate. Neither explicitly target the exchange
rate in their policy deliberations, but they will both be aware,
and likely concerned, about the inflationary consequences of a
weaker pound or euro."
The wider European markets fell sharply after U.S. inflation
data and the euro dropped below parity against the dollar for
the first time in almost two decades, as a hawkish Fed and
growing concern about rising recession risks in the euro area
continued to batter the currency.
The domestically focussed FTSE 250 index fell 0.8%,
with pub operator J D Wetherspoon sliding 8.3% after it
warned of losses this year due to higher labour and marketing
Its shares dropped to their lowest price since March 2020,
when coronavirus pandemic fears hammered markets. Peers
Mitchells & Butlers and Marston's declined 5.6%
and 3.2%, respectively.
"The difficulty now, for the entire pub sector, is that
drinking and eating at home looks to be sticking around longer,"
said 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
Asset manager Abrdn fell 5.0% after Barclays
downgraded the stock to "underweight".
(Reporting by Sruthi Shankar and Bansari Mayur Kamdar in
Bengaluru; Editing by Arun Koyyur and Jonathan Oatis)