The FTSE 100 has endured another tough start as Covid-19 outbreaks worry investors and fears about the economy are stoked by retail figures that show British shoppers are tightening their belts.

After recovering from early losses to finish flat yesterday, the blue-chip index was trading down 0.4%, or 31 points, at 7,164 on Tuesday morning. Investors face a multitude of concerns, including another Covid-19 outbreak in China that has put miners on the back foot and a fresh inflation reading due from the US tomorrow that will provide the latest temperature check on the world’s largest economy. 

Closer to home, there were signs that UK shoppers are feeling the pinch from the cost-of-living crisis, which Susannah Streeter, senior investment analyst at Hargreaves Lansdown, said had taken a ‘swipe at their financial resilience’.

Figures from the British Retail Consortium showed total sales were down 1% in June, with non-food retail falling 3% over the last three years. 

‘With lockdown savings rapidly evaporating, purses are being opened less frequently,’ said Streeter.

‘Faced with squeezed household budgets, items people want rather than need are dropping off shopping lists.’

With worries about the health of the global economy, Brent crude fell to $105 (£89) a barrel despite supply concerns persisting on the back of sanctions on Russian imports. The oil price is still a third higher than at the start of the year.

While miners took a hit this morning, the biggest faller on the FTSE was Dechra Pharmaceuticals (DPH), which lost 3.8%, or 138p, to trade at £34.96 despite delivering full-year results in line with expectations. 

Property investors British Land (BLND) and Land Securities (LAND)  dropped 3.3% each to trade at 447p and 652p, respectively, after a series of analyst downgrades on both the stocks and the wider property sector.

The FTSE 250 fell further than its large-cap peer, down 1%, or 178 points, at 18,658. Closed-end investment fund Chrysalis (CHRY ) led the drop for the second day in a row, losing 6.5% to trade at 89p, continuing to reel after confirming a write-down in the value of its second-largest holding Klarna.

Mid-cap property stocks also suffered, with shares in shopping centre owner Hammerson (HMSO) down 5.3%, or 1p, at 19p.

‘The increasingly unstable economic outlook for the UK has shown most strongly in the weak performance of the domestically focused FTSE 250, which is down 20% in the year to date, as well as the weakness of sterling, even if some of that decline is due to the strength of the US dollar,’ said Richard Hunter, head of markets at Interactive Investor.

Elsewhere among investment trusts, Bellevue Healthcare (BBH ) fell 3.7% to 156p, while VinaCapital Vietnam Opportunities (VOF ) was up 0.7% at 473p, and Templeton Emerging Markets (TEM ) added 0.6% to trade at 147p.