Commodity stocks drag FTSE 100 lower as slowdown concerns bite

London's FTSE 100 slid 2% on Monday, dragged down by commodity and financial stocks, as concerns over global economic slowdown clouded investors' risk appetite ahead of a barrage of corporate earnings reports due this week. The blue-chip index, which fell 2% to touch an over five-week low, is set for its worst day since March 4.

London's FTSE 100 slid 2% on Monday, dragged down by commodity and financial stocks, as concerns over global economic slowdown clouded investors' risk appetite ahead of a barrage of corporate earnings reports due this week.

The blue-chip index, which fell 2% to touch an over five-week low, is set for its worst day since March 4. The domestically focused midcap FTSE 250 index declined 1.7% to hit its lowest level since March 16.

Oil majors BP and Shell were down 4.7% and 3.8%, respectively, while the industrial mining sub-index lost 6.1%, tracking lower crude and metal prices as prospects of prolonged COVID-19 lockdowns in China stoked demand fears. Broadly, Asian stocks had their worst session in 1-1/2 months as concerns about rapid and aggressive U.S. rate hikes and slowing growth momentum rattled sentiment.

Banks dropped 1.8%, with Asia-focused lenders HSBC Holdings and Standard Chartered slipping ahead of their results due this week. "Having spent most of the last few weeks trying to put to one side concerns about events in eastern Europe, a slowdown in China, and the increasing risks of what inflation might do to company earnings, as well as consumer incomes, the final straw appears to be a concern about the prospect of a policy mistake by central banks, and a possible recession by the end of the year," Michael Hewson, chief market analyst at CMC Markets UK said in a note.

Bank of England Governor Andrew Bailey said on Friday the central bank could deal with the fast rise in inflation without damaging the economy, but the path was a narrow one. McColl's Retail Group slumped 55.5% as the British convenience store chain forecast tepid annual core profit after a weaker-than-expected Easter performance, dented by lower consumer spending and supply chain disruptions.

Bucking the sombre mood, shares of Polymetal climbed 5.1% after the Russian gold and silver producer said its first-quarter revenue grew by 4% year-on-year to $616 million due to higher gold prices.