On Monday, the leading share index in Britain was weighed down by a rally in the British pound and a fall in oil stocks.
Meanwhile, investors were looking ahead to the next move of the Bank of England (BoE) in terms of interest rates, as the global economic outlook weakens.
Index down
With sterling reaching a high of one month, the blue-chip FTSE 100 index declined by 0.1%. The index comprises of numerous multinational companies that generate a major portion of their revenue overseas.
Earlier in the day, the index had managed to record gains of as much as 0.7%. There was an almost 2% decline in shares of nearly all oil majors, including Shell and BP.
This was after there was a 5% decline in crude prices because manufacturing data in a number of countries turned out to be weak, thereby weighing on demand.
After recording solid gains last week due to better-than-expected earnings, indexes on Wall Street were also wavering for the day.
Market analysts said that there had been some optimism due to the earnings season, but markets have taken a nosedive in China and Europe as well.
They said that the economic picture was discouraging because of the decline in Chinese, Italian and Spanish manufacturing PMI surveys and Germany’s biggest decline in retail sales after 1994.
A survey in Britain also showed that there was a fall in manufacturing output in July and new orders also fell, with the pace the fastest it has been since May 2020.
BoE meeting
The Bank of England (BoE) is scheduled to meet on August 4th, Thursday, for its monetary policy meeting.
It is expected that policymakers will decide to lift the interest rates by 50 basis points in order to bring down surging prices, which would put the rate at 1.75%.
Since its independence in 1997, the Bank of England has never hiked its interest rate by half a basis point.
It has been raising rates since December last year, but has only hiked it up by 25 basis points five times now.
Single stocks
As for single stocks, there was a 6.1% rise in HSBC, as the biggest European bank announced a bullish outlook on dividends and a higher profitability target.
Moreover, it also turned down a proposal of splitting itself, which had been put forward by Chinese company Ping An Insurance Group Co, its top shareholder.
There was also a 12.7% increase in Pearson, as the profit outlook for the full year was reiterated. Also, the education group said that it was saving costs and also expanding the top line, thanks to the new integrated structure that had been introduced by Andy Bird.
The mid-cap FTSE 250 index, which is domestically focused, had also been on the path to gains earlier in the day. It also reversed course and ended the day with a drop of 0.4%.
A 14.6% rise was recorded in Quilter after reports indicated that the fund manager may get a bid from NatWest Group.