Investing
UK stocks drop as investors shun risky bets in turbulent week
Global Banking & Finance Review®
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By Sruthi Shankar
(Reuters) -UK’s main stock indexes slipped on Friday as global sentiment soured at the end of a week marked by political turmoil in Britain, soaring energy prices in Europe and hawkish comments from major central banks.
The blue-chip FTSE 100 dipped 0.01%, while the domestically oriented FTSE midcap index slid 0.4%.
Risk aversion gripped global markets after the shooting of former Japanese Prime Minister Shinzo Abe, while investors awaited U.S. jobs data that could offer clues on the Federal Reserve’s rate hike plans. [MKTS/GLOB]
The pound, meanwhile, weakened following brief gains made on Thursday after Boris Johnson announced his resignation as British prime minister.
The currency had hit a two-year low versus the dollar earlier this week amid the political chaos as well as worries about economic growth.
“We now see a partial policy vacuum at a time when the economy is stagnating and it’s unlikely the Budget will be presented until late in Q4,” Javier Corominas, director of global macro strategy at Oxford Economics said in a note.
“This will increase the focus on the Bank of England, further reducing the chances of a step up in the pace of rate hikes as it adopts a wait-and-see approach over weeks ahead.”
Meanwhile, a survey showed British employers slowed their hiring via recruitment agencies in June as vacancies increased at the weakest rate in more than a year, adding to signs that the labour market is losing some of its inflationary heat.
Shares of global miners such as Rio Tinto and Anglo American dragged down the FTSE 100 the most, as metal prices slid on worries about China’s COVID-19 flare ups. [MET/L]
Housebuilder Vistry Group Plc rose 2% after it forecast gross margins to rise significantly in fiscal 2022, riding on strong demand across its businesses.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Amy Caren Daniel and Arun Koyyur)
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, based on market capitalization.
Risk aversion is a financial term describing the tendency of investors to prefer lower-risk investments, often leading them to avoid high-risk assets during uncertain times.
A central bank is a national institution that manages a country's currency, money supply, and interest rates, often overseeing monetary policy and financial stability.
Energy prices refer to the costs associated with energy sources such as oil, gas, and electricity, which can significantly impact economic conditions and inflation.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power and often measured by the Consumer Price Index (CPI).
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