On Tuesday, the British stock market concluded its trading session on a lower note, amidst a global aversion to risk fueled by concerns over enduring high interest rates.
However, the downturn was mitigated by a surge in commodities-linked stocks, buoying the resource-dense index.
Leading the charge, oil and gas stocks witnessed a notable increase of 3.1%, propelled by a spike in crude prices, which reached their peak for the year.
This was closely followed by a 2.7% uplift in industrial metal miners, spurred by robust factory output data from China that drove copper prices to a week-plus high.
Additionally, precious metal miners enjoyed a 2.3% ascent as gold prices hit a new record.
Despite these sector gains, the FTSE 100, which has a global outlook, receded by 0.2% after achieving a high not seen in over a year, as trading resumed post-Easter break at the start of the second quarter.
In contrast, the broader European STOXX 600 index fell by 0.7%, retreating from an all-time high, as investors scaled back expectations for U.S. interest rate cuts following unexpectedly strong economic indicators.
UK stocks have lagged behind their developed market counterparts, which have reached record highs this year, hampered by a stagnating economy and minimal exposure to the tech sector.
Frédérique Carrier, head of investment strategy at RBC Wealth Management in the British Isles and Asia, commented, “Given depressed valuations, and the poor performance, the market could experience a bounce, particularly as the Bank of England interest rate cuts are in sight.
But overall, we see more attractive opportunities elsewhere, in markets which provide a better balance of growth and value stocks compared to the UK’s bias to value and defensive sectors.”
The FTSE 250, more reflective of the domestic economy, fell by 0.9% despite positive economic indicators.
A survey indicated that British manufacturing activity grew in March for the first time in 20 months, signaling an end to the recent shallow recession.
Moreover, reports revealed a significant annual increase in British house prices last month, the fastest since December 2022, and a deceleration in shop price inflation to its slowest rate in over two years.
On the corporate front, HSBC Holdings saw a modest increase of 0.4% after announcing an expected gain of $4.9 billion from the sale of its Canadian business to Royal Bank of Canada.
Meanwhile, the company is considering divesting some of its German operations.
Conversely, fashion retailer Superdry faced a dramatic 55% decline after CEO and principal shareholder Julian Dunkerton announced he would not make an offer for the company, marking a significant setback for the brand.