FTSE 100 Live: Weak GDP fuels stagflation fears, shares and Bitcoin fall again

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DP contracted by 0.1% in March, adding to stagflation fears as the UK economy feels the pressure from rising prices.

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The decline was driven by the powerhouse services sector and meant the UK recorded its lowest quarterly growth rate in a year, according to the Office for National Statistics.

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The increase of 0.8% for the first three months of the year was weaker than 1.3% in the previous quarter and the 1% expansion forecast.

Read more on today’s GDP release

Live updates

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FTSE 100 down 2%, BP falls 3%

The FTSE 100 index is down more than 2% as investors worry that a prolonged fight against inflation will derail the global economy.

Miners and oil companies were among big fallers in London, with Anglo American and Glencore shares down more than 4% and BP 3% lower after the Brent crude price dropped more than 2% to $105 a barrel.

Others on the fallers board included Ocado with a 5% decline, while Hargreaves Lansdown slid 9% after the financial platform repeated its 2022 guidance but noted that geopolitical events were having an impact on investor confidence.

The FTSE 100 index, which rose more than 100 points yesterday, was down 155 points at 719. A shortened risers board was led by BT, which improved 2% following its annual results and details of a joint venture deal with Eurosport business Discovery.

JD Sports Fashion and Rolls-Royce shares were also higher after reassuring investors with their latest trading updates.

The FTSE 250 index fell 2% or 394 points to 19,252, which included declines of 5% for Trustpilot and publisher Future.

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Rates rise caution as GDP stalls

The UK’s short-lived impact from Omicron meant the economy grew 0.8% in the first quarter, but almost all this growth came in January.

Output slipped 0.1% in March and economists are forecasting a second decline in April due to the ending of free Covid-19 testing.

ING Economist James Smith said: “Health spending has been a key driver of GDP through the pandemic, and in fact, the overall size of the economy would be around 1% smaller had output in this sector stayed flat since early 2020.”

Markets expect another five hikes in interest rates by next spring but Smith thinks today’s figures will contribute to a more cautious approach at the Bank of England, with policymakers set to raise two more times “before pressing the pause button”.

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Bitcoin down to $26,000, Coinbase falls

Bitcoin is down another 8% at just over $26,000 today, leaving the cryptocurrency at its lowest level since November 2020 and down by 35% in the past month.

Crypto markets have borne the brunt as investors take flight from riskier assets at a time of higher interest rates and global recession fears.

US-listed Coinbase’s share price fell another 26% yesterday, bringing its losses over the last week alone to almost 60%.

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Rolls-Royce sticks to guidance as flying hours recover

Rolls-Royce has stuck by financial guidance as the engines giant continues to expect “positive momentum” in its performance in 2022.

Ahead of its annual meeting in Derby, Rolls said civil aerospace large engine flying hours were 42% higher than the prior year period.

It added: “Passenger demand is recovering on routes where travel restrictions have been lifted, such as in Europe and the Americas, but additional Covid-19 restrictions have resulted in fewer flights in China where the situation is still evolving.”

The company expects positive profit and cash flows this year, having reduced costs in civil aerospace and seen strong performances in its Defense and Power Systems divisions.

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Nasdaq hit after US inflation, FTSE 100 to fall 1%

Technology shares have continued their slide after yesterday’s US inflation figures stoked expectations of more big rises in interest rates.

April’s CPI figure of 8.3% was lower than the 41-year high of 8.5% seen in March, but higher than the 8.1% forecast.

Fears that prices will remain elevated for longer were fueled by a bigger-than-expected 0.6% month-on-month rise excluding fuel and food.

This will put pressure on the Federal Reserve to act faster on interest rates, which in turn adds to expectations that the US economy is set for a hard landing.

The uncertain growth outlook meant the tech-focused Nasdaq plunged another 3%, having already fallen by more than 25% this year. The Dow Jones Industrial Average fell 1% and the S&P 500 by 1.6%.

Asia markets followed Wall Street lower and the FTSE 100 index is forecast by CMC Markets to open 102 points lower at 7,245, wiping out the gains seen yesterday.

The global recession fears have put pressure on oil prices as Brent crude futures dipped 1% to $106 a barrel this morning. And cryptocurrency Bitcoin is at its lowest level since early 2021 after falling another 5% to around $27,000.

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Credit: www.standard.co.uk /

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