UK shares edged lower on Monday as investors were cautious ahead of the domestic budget later this week, although the gains in heavyweight oil firm BP capped limited declines.
The blue-chip FTSE 100 index was down 0.3%, as of 0900 GMT.
While signs of easing inflation have kept investor sentiment afloat, the focus is now on Finance Minister Jeremy Hunt’s pre-election budget on Wednesday for cues on potential tax cuts and the economic condition.
“What appears clear is that the Chancellor has a lot less fiscal room to play with than he hoped, which is why he’s played down speculation about significant tax cuts,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Given the huge borrowing commitments the government already has to honour, it seems unlikely there will be a big fanfare of an income tax giveaway.”
Automobiles, personal goods ad rate-sensitive homebuilders led sectoral declines, down between 1% and 2%.
The FTSE 100 has also underperformed global equities recently due to lack of exposure to the technology sector, which has powered gains elsewhere lifted by an artificial intelligence-led rally.
BP advanced 1% after Jefferies upgraded the oil heavyweight to “Buy” from “Hold”, lifting the oil and gas index up 0.3%. Precious metal miners also rose 1.6%, as spot gold prices hovered near two-month highs on rising bets for a US Federal Reserve interest rate cut.
London stocks track global markets higher
Mondi shares lost 2.1%, after a report said the packaging firm was revising its takeover proposal for its smaller rival DS Smith.
DS Smith shares edged up 0.3%. Meanwhile, the mid-cap FTSE 250 index was down 0.3%, led by Hipgnosis dropping 8.8% to a hit a record low, after steep declines in asset valuations led the UK music investor to freeze dividend payments for the “foreseeable future”.
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