Market Jitters: London Stock Index Stumbles Amid Political Uncertainty

London's stock index declined for the fourth day due to concerns over the UK budget and the U.S. presidential election. Mining stocks suffered, while Reckitt and WPP reported gains. Investors await key economic indicators and the Bank of England's interest rate decisions.

London's flagship stock index continued its downward trend for a fourth consecutive session on Wednesday, burdened by falling mining stocks as investors reacted nervously to potential impacts from the upcoming UK budget and U.S. presidential election. Both the FTSE 100 and the FTSE 250 recorded declines of 0.6%, resting just above one-week lows encountered previously.

The mining sector was hit hard, with industrial metals miners dropping by 1.6% and precious metals miners down by 1.4%, due in part to a stronger dollar impacting copper and gold prices. Investor wariness has been stoked by the potential return of Donald Trump to the U.S. presidential office, with his trade policies historically driving inflation higher.

Attention is now directed towards the Bank of England, whose upcoming meeting in two weeks could herald a change in interest rates, as markets anticipate a rate cut in November with a further cut potentially in December. Annual consumer price inflation dropped to 1.7% in September, the lowest since April 2021, offering some relief. Investors are eagerly awaiting BoE Governor Andrew Bailey's remarks for clues on monetary policy, along with Thursday's flash PMI figures and the British budget later this month. Notably, Reckitt posted a 3.9% gain following better-than-expected third-quarter results, while WPP surged by 6.1% on robust revenue growth.

(With inputs from agencies.)