Subdued Start for British Equities; Rate Decisions Loom

British equities began the week quietly as industrial metal miners pulled the index down. Investors are eyeing the Federal Reserve's rate decision. Technology stocks dropped on the FTSE 250, and a global AI-linked stock rout settled. Sterling rose, impacting export firms, while cigarette stocks gained after a U.S. policy change.

British equities commenced the week on a muted note, primarily hindered by industrial metal miners weighing down the index. Investors are closely monitoring the Federal Reserve's upcoming rate decision, slated for later this week.

The FTSE 100 closed flat despite reaching a record high the previous Friday. On the domestically-oriented FTSE 250, technology stocks experienced a decline, with Polar Capital Technology Trust and Allianz's investment trust dropping 6.8% and 5.2%, respectively.

A global decline in AI-linked stocks, spurred by the cheap Chinese artificial intelligence model's surge in popularity, gradually tapered, leaving the STOXX 600 neutral and the Nasdaq down by around 3%. Meanwhile, sterling continued its upward trend, adversely affecting export-driven firms. Industrial metal miners fell to a two-week low due to Anglo American's stock dropping 6.2% amid reports BHP Group won't renew its bid. On a positive note, British American Tobacco and Imperial Brands saw stock increases following the U.S. withdrawal of a menthol cigarette ban proposal.

Morgan Stanley projects UK's economic growth at less than 1% this year, akin to predictions from Goldman Sachs and JPMorgan, pointing to an economic slowdown and labor market frailty. Amidst a week bustling with global central bank meetings, attention is fixed on the Federal Reserve's interest rate decision on Wednesday, where they are expected to maintain the current lending rate. Markets remain vigilant for the U.S. personal consumption expenditures report due Friday, critical for assessing inflation trends.

(With inputs from agencies.)