FTSE 100 Drops as Energy and Miners Weigh, Fed Rate Cut Optimism Cushions Losses
In a mixed trading session, the UK's FTSE 100 index slipped 0.2% on Tuesday, dragged down by energy and miners' stocks. However, hopes of a September interest rate cut by the U.S. Federal Reserve helped limit the losses. The mid-cap index, on the other hand, managed to stay afloat with a 0.1% gain.
Energy shares took the biggest hit, falling 1% as oil prices dipped. Major players like Shell and BP each saw a 1% decline. The situation in the Middle East also contributed to the drop in oil prices, as Israel accepted a proposal to address ceasefire issues in Gaza.
Real estate and real estate investment trusts stocks also saw a decline of 0.2% each, following gains in the previous session. Industrial metal miners were down 0.3% as copper prices retreated after a recent rally.
Antofagasta managed to buck the trend, gaining marginally after reporting a 5% increase in half-year profit. Precious metal miners, on the other hand, saw a 0.5% increase as gold prices stabilized near record highs.
Investors are now eagerly awaiting Fed Chair Jerome Powell's speech at the Jackson Hole economic symposium later this week. Powell is expected to signal the case for a September rate cut, given recent comments from Fed officials and supportive economic data.
In addition, Purchasing Managers Index (PMI) numbers from the UK and U.S., along with minutes from the Fed's previous meeting, will be closely watched in what is expected to be a relatively data-light week.
Wood Group, however, saw a 1% drop despite posting an 8.5% increase in first-half adjusted core earnings.
In conclusion, the market remains cautiously optimistic about a potential rate cut by the Fed, with various economic indicators and geopolitical developments influencing investor sentiment. It is crucial for investors to stay informed and monitor key events to make well-informed decisions about their investments.