The FTSE 100 fell after inflation jumped to a three-month high and Hargreaves Lansdown (HL) tumbled as co-founder Peter Hargreaves offloaded 18 million shares.
The main index lost 17 points, or 0.2%, to trade at 6,731 as the Office for National Statistics reported inflation rose more than expected in January to 0.7% in January as the country was plunged into a fresh lockdown that caused food prices to tick higher and restricted discounting on household goods such as sofas.
Rachel Winter, associate investment director at Killik & Co, said views on where inflation goes from here are ‘mixed’.
‘Further increases in unemployment levels could harm consumer confidence, with a resultant knock-on effect on inflation,’ she said.
‘On the other hand, a post-lockdown spending surge combined with government stimulus could lead to higher inflation over the longer term.’
Hargreaves Lansdown fell to the bottom of the index, sliding 6.8%, or 113p, to £15.40 as 74-year-old billionaire Hargreaves cashed in a £300m stake in the company he co-founded. He is the largest shareholder in the company, with the sale representing about a sixth of his holding and follows a £580m share sale last year which he said was to ‘diversify my assets’.
British American Tobacco (BATS) was also a significant loser, down 4.9%, or 135p, at £26.13 as it warned of mid-single digit earnings growth this year, which countered the 10% rise in profit seen last year.
Richard Hunter, head of markets at Interactive Investor, said the tobacco giant’s ‘prodigious cash generating ability has carried it though the tortuous environment of the last year’ but the industry is threatened by change tastes, and regulation, as well concerns that investors will shun the sector on ethical grounds.
‘Such concerns have dragged on the share price which has lost 18% over the last year…Even with its defensive qualities, strong cash generation, and a generous dividend yield alongside, the market consensus of the shares remains resolutely positive on prospects, coming in at a strong ‘buy’,’ said Hunter.
The FTSE 250 fell further than its large cap counterpart, shedding 0.4%, or 102 points, to 21,313.
Hargreaves’ share sale had a knock on effect to rival AJ Bell (AJB), which dropped to the bottom of the mid-cap index, losing 3.5%, or 16p, to trade at 439p. Insurer Lancashire (LRE) lost 2.6%, or 18p, to 664p following a slew of positive analyst notes earlier in the week.
In investment trust news, Chrysalis Investments (CHRY) – the growth fund formerly known as Merian Chrysalis – slid 3.1%, to 218p after asking shareholder permission to issue up to 600 million shares. It said it has a pipeline of £1bn of investment opportunities and the board believes a placing will put the fund in a position to take advantage of them.
Supermarket Reit (SUPR) edged 0.2% higher to 108p after acquiring a Sainsbury’s supermarket site and adjoining Homebase unit in Northern Ireland – the first purchase it has made in the region – with an unexpired lease of 15 years for £24.8m representing a net initial yield of 6.6%.