The FTSE 100 was firmly in the red on Tuesday, with most constituents trading negatively in early trade.
London’s flagship index gave up 0.65% as investors took cash off the table amid rising tensions related to the upcoming budget and concerns about UK public borrowing.
“The FTSE 100 started Tuesday on the back foot, dragged lower by weakness in the energy and telecoms sectors,” said AJ Bell investment director Russ Mould.
“Precious metal miner Fresnillo was in demand once again as gold prices remained at record highs but otherwise the unhappy story of broad-based losses from Monday afternoon continued for the UK’s flagship index.
“There was a reminder of the pressure Chancellor Rachel Reeves is under ahead of next week’s Budget as the UK’s public borrowing exceeded official forecasts in September. However, it was below the number which less optimistic independent economic forecasters had pencilled in.”
At the time of writing, around 90 of the FTSE 100’s constituents were trading down, but the losses were largely contained, with no share falling more than 3%.
The drop represents risk aversion that was also evident in European shares and in S&P 500 futures.
In addition to telecoms and energy, the UK’s housebuilders were under pressure once more following yesterday’s soft Rightmove reading of house price growth.
As highlighted by Russ Mould, Fresnillo was again the leader of the pack, carving out another 1% gain after surging over 5% yesterday. Precious metals prices are ripping higher, and the trickle down effect is being felt by miners set to benefit from higher production margins.
With several risk events on the horizon, the drop in equities is understandable, and investors will likely be lining up potential buys for when the uncertainty decreases.