The FTSE 100 has opened at its lowest point this week following the European Central Bank’s (ECB) more hawkish tone in response to rising inflation on the continent yesterday. 

Central banks across the globe have been hiking interest rates to curb inflation, oil prices are back at three-month highs, and food costs continue to surge, all of which are reflected in downbeat investor sentiment.

The blue-chip index was down 1.2%, or 86 points, at 7,389 as the price of a barrel of Brent crude remained persistently high at $123 (£98.76).

The ECB signalled it would start hiking rates next month by a quarter of a percent, followed by a steeper move in September and even October if inflation remains high.

Last week the Bank of Canada hiked interest rates by 50 basis points, with the Australian bank doing the same two days ago. The Federal Reserve is likely to do the same next week, while the latest figures on US inflation will be closely watched this afternoon. 

A further blow to investor sentiment came after the Bank of England announced UK lenders HSBC (HSBA), Lloyds Banking Group (LLOY) and Standard Chartered (STAN) had not taken enough steps to prevent themselves from being ‘too big to fail’ in future economic crises.  

Elsewhere on the FTSE 100, companies in the property sector took a beating, with shares in building materials group CRH (CRH) tumbling 3% to £30.93, and industrial property investment company Segro (SGRO) down 2.3% at £10.14.

Food and drinks companies have also found things more difficult against the backdrop of rising prices. Bottling company Coca-Cola HBC (CCH) fell 2.7% to £17.27, Associated British Foods (ABF) dropped 2.7% to £16.07, and Diageo (DGE) pulled back 2.5% to £35.10.

‘With oil prices back at three-month highs earlier this week and agricultural commodities also showing no signs of falling either, investors are quickly redoing their sums when it comes to earnings growth estimates, and they aren’t liking the numbers coming back,’ said Michael Hewson, chief market analyst at CMC Markets UK.

Software company Aveva Group (AVV) was the biggest gainer, up 2.6% at £24.3 after assuring investors of encouraging trends in its annual results this week. 

Ocado (OCDO) edged up 0.5% at 919.8p, and Sainsbury’s (SBRY) rose 1.3% at 212.1p, earning back some of yesterday’s losses.

The FTSE 250 was down 0.9%, or 179 points, at 19,894. The mid-cap index was dragged down by budget airline Wizz Air (WIZZ) for a third consecutive day, which nosedived 5.3%, or 122p, to £20.02 after chief executive Jozsef Varadi urged pilots to fly despite being tired to avoid cancelling further flights.

Danish consumer review website Trustpilot (TRST) was another big faller, dropping 5.5% at 89.3p.

The biggest faller yesterday, CMC Markets (CMCX), made up some lost ground, rising 6.9% to trade at 255p.

Apax makes a case for private equity 

Among investment trusts, Apax Global Alpha (APAX ) shot up 8.4% to 194p, narrowing the wide 28% discount it stood on last night, after Apax X, one of the in-house funds it holds, sold a controlling stake in MyCase, a US case management software provider for law firms to Affinipay, a digital payments business in Texas.

The transaction values APAX’s stake at €22.5m (£19m), a 48% uplift on the previous valuation and represents a quick turn on an investment made two years ago.

Numis Securities said the deal was another example of the conservative valuations of holdings in private equity trusts and the strong demand for their high quality assets.

On Wednesday HgCapital (HGT ), still trading on a 16% discount to net asset value, was boosted by a refinancing of its largest holding, Access, a business management solutions provider whose value rose 31%.

On the same day Oakley Capital Investments (OCI ) sold a majority stake in German cloud hosting platform Contago to KKR on a 105% premium to its carrying value in the fund. It stood on a 33% discount to NAV last night. 

‘We remain positive on the outlook for listed private equity, given current discounts may be reflecting excessive pessimism about the outlook,’ said Numis analysts s Ewan Lovett-Turner and Priyesh Parmar.