London stocks edge lower as Middle East tensions and Burnham speech focus weigh on sentiment
UK equities trade slightly lower on Monday as renewed hostilities in the Middle East damp risk appetite and investors wait for a closely watched speech from Andy Burnham. The move leaves both the FTSE 100 and FTSE 250 under pressure after both indexes ended last week in negative territory.
Highlights
- FTSE 100 drops 0.2% and FTSE 250 slips 0.1% by 0949 GMT as weaker risk sentiment offsets gains in energy and financial stocks.
- British American Tobacco falls 1.6% on plans to cut workforce by 20%, while BAE Systems and Babcock decline 1.4% and 7% respectively following UK defence strategy shift.
- UK business growth expectations for next quarter hit 2024 lows, amplifying market caution as investors monitor Burnham's fiscal policy stance and geopolitical tensions.
Market moves and corporate drivers
As reported by Reuters, the FTSE 100 falls 0.2% to 0949 GMT, while the FTSE 250 slips 0.1% as weaker risk sentiment offsets support from energy and financial stocks.Consumer staples weigh on the blue-chip index after British American Tobacco drops 1.6% following plans to cut its workforce by 20%. Aerospace and defence shares also come under pressure, with BAE Systems down 1.4% and Babcock falling 7%.
The sector move follows a Sunday statement from the Ministry of Defence that the UK will scrap plans to replace its ageing destroyers and instead focus on drone warships. Mining stocks are also lower as gold declines after the recent escalation in the Middle East fuels inflation concerns.
Limiting the broader market decline, BT edges higher after it and Verizon announce a deal to combine their international enterprise operations in a 50:50 joint venture.
Political and economic signals in focus
Investors are also watching Burnham's speech for clues on fiscal policy and his approach to the economy, with the Labour lawmaker widely expected to become Britain's next prime minister.On the macroeconomic front, a survey shows British companies' growth expectations for the coming quarter fall this month to their lowest level of the year. That softer business outlook adds to the cautious tone in UK markets as traders balance domestic economic concerns against geopolitical risks.
In our earlier coverage of sterling’s slide ahead of Andy Burnham’s speech, we noted the pound was hovering near a seven-month low as investors looked for clues on how a potential new UK government would handle growth and borrowing. The report highlighted heavy bearish positioning against sterling and stressed that markets were watching closely for signs of fiscal discipline and key cabinet choices to avoid renewed gilt-market instability.
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