UK stock markets declined on Thursday, with the FTSE 100 and FTSE 250 indices facing significant monthly losses as investor optimism for substantial rate cuts next year waned. The blue-chip FTSE 100 index dropped 0.6% by 8:30 a.m. GMT, marking its lowest level since August 8 and heading for a second consecutive week of declines. The FTSE 250 midcap index also slipped by 0.5%.
Both indexes are down for the month, with the FTSE 100 losing 1.5% and the FTSE 250 falling 2.5%. Investor concerns are growing as Britain’s inflation outlook worsens, fueled by a new budget that emphasizes high spending. This situation is likely to deter the Bank of England from pursuing the larger rate cuts anticipated previously, aligning it differently from other global central banks.
Following Finance Minister Rachel Reeves’ recent budget unveiling, which includes the largest tax hikes in 30 years, traders now anticipate about 95 basis points of rate cuts by the end of 2025, revised down from the earlier expectation of 125 basis points.
Amid the market’s broader losses, the oil and gas sector gained 0.5% as Shell surged over 1% following its third-quarter profit report, which exceeded forecasts with $6 billion in earnings due to strong LNG sales. The personal goods sector also saw growth, with Burberry advancing 1.7% after HSBC upgraded the stock to a “buy” rating.
In other notable moves, medical products maker Smith + Nephew plunged 12% after revising its annual revenue growth forecast downward due to a weaker-than-expected performance in China. Coca-Cola HBC, a bottling company, rose 2.3% following an increase in its annual forecast, driven by high demand for energy drinks, coffee, and sparkling beverages. Meanwhile, Whitbread fell 2.1% as it traded without rights to its latest dividend payout.
