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UK equities slip as French election, US rate uncertainty make investors jittery

Mon, 10th Jun 2024 17:28

FTSE 100 down 0.2%, FTSE 250 off 0.5%

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M&G Plc up after JP Morgan upgrades stock to "overweight"

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UK wages, GDP figures due later in the week

June 10 (Reuters) - UK stocks slipped on Monday, tracking losses in European stocks after French President Emmanuel Macron called a snap parliamentary election, while uncertainty around the timing of interest rate cuts in the United States also weighed.

Britain's blue-chip FTSE 100 closed down 0.2%, while the mid-cap FTSE 250 fell 0.5% for a second straight session of losses.

Political uncertainty in Europe made UK investors more cautious after Macron's decision on Sunday to call an election after a bruising loss in a European Parliament ballot.

"The (election) injects a big dose of the uncertainty which markets hate – with the euro dropping sharply in response to the developments," said Russ Mould, investment director at AJ Bell.

Most UK sectors ended lower, with beverages stocks among the worst hit, declining 2.1%, although energy stocks gained 1.2% as oil prices rose by $1 per barrel.

"There's some (election) risk in the U.S. as well. So London finds itself caught between these markets, dealing with quite a lot," said Chris Beauchamp, chief market analyst at online trading platform IG.

"The modest losses we're seeing is a relatively contained self. Given the strong forms of European markets, maybe we're just due a little bit of profit taking in the short term."

Traders were also still assessing the impact of Friday's blow-out U.S. jobs report, which dampened hopes for a September rate cut by the Federal Reserve.

The European Central Bank began its rate cutting cycle last week with a 25 bps trim.

Investors now await Britain's wages and GDP data, due later in the week, to gauge the Bank of England's monetary policy path ahead of its next meeting this month.

Among individual stocks, ME Group International fell 4.9% after the instant-service equipment group said its full-year profitability was in line with expectations.

Insurer and asset manager M&G Plc bucked the downtrend, rising 2.4% and topping the FTSE 100 after JP Morgan upgraded its rating to "overweight" from "neutral". (Reporting by Pranav Kashyap and Purvi Agarwal in Bengaluru; Editing by Sonia Cheema, Mrigank Dhaniwala and Susan Fenton)

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