(Reuters) -UK shares fell on Tuesday, pushed down by rate-sensitive banks, utilities and real estate stocks on mounting investor concerns about the country’s finances.
The blue-chip FTSE 100 fell 0.3% by 1013 GMT, while the domestically focussed midcap index fell 1.4%, touching its lowest in over two months.
Britain’s 30-year borrowing costs rose to their highest levels in over 27 years, while sterling fell almost 1%, amid investor anxiety about the UK’s ability to get its finances under control.
Thirty-year gilt yields touched a peak of 5.69%, up five basis points on the day, their highest since May 1998.
Finance minister Rachel Reeves is expected to raise taxes in her autumn budget to remain on course for her fiscal targets, potentially adding to the challenge of speeding up the economy.
“Markets are asking whether Reeves can walk the line between responsibility and delivery,” said Nigel Green, CEO of deVere Group.
“The Budget will be her moment of truth. If she falters, borrowing costs will spike further, sterling will suffer, and confidence will drain.”
Heavyweight banking stocks, which had marginally rebounded in the previous session after Friday’s declines, fell on the day with NatWest, Barclays and Lloyds down about 1% each.
They had fallen on Friday after a think-tank recommended a new tax on lenders as a possible way for Reeves to raise revenue.
The real estate sector declined, with Rightmove and Segro down 2.7% and 2.2%, respectively.
The homebuilders’ index lost 2.7%, while utility stocks fell with SSE down 2.7% and United Utilities declining 2.8%.
Retailers and consumer groups like Tesco, M&S and British American Tobacco also declined.
Communication services stocks such as BT Group and Vodafone slipped, while Airtel Africa lost 3.1%.
Aerospace and defence companies also fell with Rolls-Royce down 2%.
Conversely, the energy sector added 1.4% tracking higher oil prices. Shell and BP rose 1.6% and 1%, respectively. [O/R]
The healthcare sector rose 1%, while precious metal miners advanced tracking higher gold prices with Fresnillo up 1.8%. [GOL/]
In company news, Ithaca Energy shares fell 11.2% after its two largest shareholders sold about 3% stake in the company at a discount.
(Reporting by Sukriti Gupta; Editing by Vijay Kishore)
Comments