On Tuesday, the FTSE 100 in the United Kingdom experienced a slight decline, primarily driven by a drop in oil prices that put pressure on energy-related stocks.
Additionally, the country’s borrowing situation hinted at the possibility of tax cuts in an upcoming budget update later in the week.
The FTSE 100, consisting of large-cap companies, saw a 0.4% decrease in its value by 0926 GMT, while the mid-cap index exhibited a smaller decline of 0.1%.
Oil futures took a downturn on Tuesday, reversing the substantial gains observed in the previous two sessions.
This shift in sentiment among investors was attributed to caution ahead of an upcoming OPEC+ meeting scheduled for the following Sunday, where discussions on the potential deepening of supply cuts were expected.
One of the notable sectoral declines was seen in heavyweight energy stocks, which experienced a 1.1% drop, closely mirroring the decline in oil prices.
Further impacting the benchmark index, the British pound strengthened by 0.2% against the US dollar, which added pressure, particularly to companies heavily reliant on exports.
In a positive economic development, the UK’s borrowing in the first seven months of the financial year turned out to be lower than initially predicted by budget forecasters.
This data was released a day ahead of the expected announcement by Finance Minister Jeremy Hunt regarding potential tax cuts in a pre-election move.
Victoria Scholar, the head of investment at Interactive Investor, noted, “This borrowing figure potentially provides some flexibility for Chancellor Jeremy Hunt when he makes his announcements tomorrow.”
Prime Minister Rishi Sunak, who is anticipated to call for an election in the coming year, mentioned on Monday that he was considering tax cuts as a means to support the sluggish economy, especially following a recent deceleration in the country’s high inflation rate.
Scholar also commented, “With a General Election looming, better-than-expected government finances, Sunak’s year-end target to halve inflation already met, and the Conservatives struggling in the polls, the Chancellor may resort to some vote-winning tax cuts in tomorrow’s Autumn Statement.”
Among the mid-cap companies, Workspace Group experienced a 3% decline after posting a half-year loss, while IT services and consulting firm Softcat saw a 3% drop following a downgrade by J.P. Morgan.
On a positive note, meat producer Cranswick’s shares rose by 1.8% as the company forecasted annual profits at the upper end of current market estimates.
Additionally, outsourcing firm Capita’s shares surged by 9.4% after announcing plans to cut approximately 900 jobs globally as part of its cost-cutting initiative.