UK midcaps end at two-month lows in dour start to new quarter

The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo
  • UK mid-caps to record worst week since October 2020
  • AO World slumps as supply chain disruptions weigh
  • Software provider Sage to cut 800 jobs globally
  • FTSE 100 down 1.0%, FTSE 250 off 0.3%

Oct 1 (Reuters) - British mid-cap stocks closed two-month lows on Friday, as warnings from electrical goods retailer AO World and pub operator J D Wetherspoon stoked concerns around supply chain disruptions and higher energy prices.

The domestically focussed mid-cap index (.FTMC) ended 0.3% lower to record its worst week since October last year, hurt by declines in travel and leisure stocks (.FTNX405010).

The blue-chip FTSE 100 index (.FTSE) lost 1.0% as a stronger pound pressured the dollar earners on the index.

AO World (AO.L) plunged 24.3% after first-half revenue was hit by a shortage of delivery drivers, while Wetherspoon gained 2.5% despite a near doubling in its annual losses. read more

"In the United Kingdom, there has been an alarming drop in business confidence in the space of a month, with the optimism engendered by the vaccine roll-out feeling like a distant memory amid a fuel, supply chain and cost of living crisis," said Russ Mould, investment director at AJ Bell.

For the year so far, the FTSE 100 is up nearly 9% and the mid-cap FTSE 250 index 11%, on support from re-opening optimism and easy central bank policies.

However, a rise in cost pressures from supply chain disruptions and higher energy prices have weighed on UK's economy, putting the mid-cap index on track to post its fourth consecutive weekly decline.

There is going to be some further economic recovery and some further gains in equity markets, but from now on, gains will be relatively small as the recovery pace in the United States and China is expected to slow, said Franziska Palmas, market economist at Capital Economics.

Among other stocks, software company Sage (SGE.L) fell 1.3% after saying it will cut more than 800 jobs across the world. read more

GlaxoSmithKline (GSK.L) dropped 1.3% after ending collaboration with Germany's Merck KGaA (MRCG.DE) on cancer treatment. read more

Reporting by Bansari Mayur Kamdar and Amal S; Editing by Sriraj Kalluvila and Uttaresh.V

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