The FTSE 100 index took a nosedive for the fourth straight day as the global sell-off in stocks fast-tracked. The index tumbled to £6,843, which is 4.45% below its year-to-date high. The index is reacting to the strong US inflation and weak earnings by Rolls-Royce and Burberry.
The US recorded a surge in its Consumer inflation numbers. The CPI figures were up by 4.2% which analysts have termed as the fastest CPI growth rate. The economy started recovering after being greatly affected by the Corona virus pandemic.
This inflation has however emerged fears in both the UK and US. Many fear that the interest rates will be taken a notch higher as the inflation rate continues being on the rise. Analysts are closely watching the Fed in a bid to know when they will tighten their timeline which will mean a higher push in the interest rates.
Like most companies, Burberry was faced with major challenges with the onset of the Corona virus pandemic. This led to the closure of its stores. Their sales fell from 2.6 billion pounds to 2.3 billion pounds. The Burberry share price dropped by more than 7%.
Shares in BT Group took a nosedive as its investment commitments left no room for increases. UK Telecoms company announced that revenues fell by 7% because of the Corona pandemic. Investments in the shift from copper to fiber and falling revenues caused a drop of 6% in the pre-tax earnings.
As air travel came to a halt to due to the virus restrictions, Rolls-Royce recorded a loss of nearly £4 billion in 2020. It also had no choice but to let go almost 7,000 of its employees. This led the company to borrow loans to compensate their loss.
Other worst performers in the FTSE 100 Index include: Anglo American, Rio Tinto plc, Just Eat Takeaway, among others.