UK equities declined sharply on Thursday, with the FTSE 100 sliding 0.94% to 10,410.01 points by mid-morning, as losses in financial and mining sectors outweighed gains in select defensive names. The mid-cap FTSE 250 also slipped 0.63%, reflecting broad-based caution ahead of the Bank of England's interest rate decision and ongoing reassessment of the Federal Reserve's policy trajectory.
Financial and mining stocks lead the decline
Financial shares were among the biggest drags on the market. London Stock Exchange Group fell 3.5% after Rothschild Redburn downgraded the stock to 'neutral,' while investment firm 3i Group dropped 4.3%. The weakness in financials contributed significantly to the broader market downturn.
Mining stocks also suffered heavy losses, with the precious metals mining sector tumbling 5%. Fresnillo declined 5.8% and Hochschild Mining fell 7%, as investors rotated away from the sector amid persistent inflation concerns and a stronger dollar outlook.
BoE decision and Fed outlook in focus
The Bank of England is widely expected to hold interest rates at 3.75% later on Thursday, a decision that comes a day after the Federal Reserve maintained its benchmark rate. However, nine Fed policymakers signaled expectations for at least one rate increase this year, reinforcing a hawkish stance that has weighed on global risk appetite. Investors are now pricing in a more cautious outlook for economic growth and corporate earnings, particularly in rate-sensitive sectors.
Homebuilding stocks retreated 2.6% ahead of the BoE announcement, with Persimmon falling 6.4% to become the worst performer on the FTSE 100. The decline underscores concerns about borrowing costs and housing market conditions in a higher-for-longer rate environment.
Tesco slips on slowing sales growth
Tesco, the UK's largest food retailer, saw its shares drop 2.2% after reporting a slowdown in first-quarter sales growth. The update prompted a negative market reaction as investors monitor consumer demand trends amid persistent cost-of-living pressures.
Energy stocks fall as oil prices ease
Oil and gas stocks also traded lower, with BP and Shell both declining 1.5% as crude prices fell to their lowest levels since the start of the Iran war. The drop in oil prices added further pressure on the energy sector and contributed to the overall weakness in UK equities.
Intertek and Informa buck the trend
Despite the broad sell-off, a handful of stocks posted gains. Intertek rose 1.5% after the testing and certification company agreed to a takeover by Swedish private equity firm EQT. Informa emerged as the top performer on the FTSE 100, gaining 2.3% after forecasting stronger growth in 2027, providing investors with a more optimistic outlook for its exhibitions business.
For context on recent market movements, see our analysis on FTSE 100 Drops 0.7% as Hawkish Rate Bets and Political Turmoil Weigh on London Markets and the broader FTSE 100 Outlook: Three Key Drivers Shaping the Footsie This Week.
Overall, UK stocks remained under pressure as investors positioned themselves ahead of the Bank of England's policy announcement while continuing to evaluate signals from the Federal Reserve regarding the future path of interest rates.
This article is for informational purposes only and does not constitute financial advice.
