Investors cautious ahead of budget as UK shares dip slightly

The UK’s main stock market index, the FTSE 100, edged down 0.4% on Monday as investors adopted a cautious approach ahead of the upcoming budget announcement by Finance Minister Jeremy Hunt.

While recent signs of easing inflation have provided some support, the focus has shifted to Wednesday’s budget, with hopes of potential tax cuts and clarity on the economic outlook. However, analysts anticipate limited room for significant tax giveaways due to the government’s existing borrowing commitments.

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Losses were concentrated in the automobile, personal goods, and homebuilding sectors, all down between 1% and 2%. The FTSE 100 also continues to lag behind global peers due to its lack of exposure to the technology sector, which has been driving recent gains fueled by an artificial intelligence rally.

BP provided a bright spot, rising 1% after Jefferies upgraded the oil giant’s stock, lifting the oil and gas sector by 0.3%. Conversely, packaging firm Mondi fell 2.1% following reports of a revised takeover proposal for its competitor DS Smith, which saw its shares edge up slightly.

The mid-cap FTSE 250 index also saw a modest decline of 0.3%, with music investor Hipgnosis leading the losses with an 8.8% drop, hitting a record low after freezing dividend payments due to asset valuation pressures.