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UK’s FTSE 100 falls as weak oil drags on commodity-linked stocks

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UK’s FTSE 100 index fell on Wednesday as weak oil and metal prices pressured commodity-linked stocks, while worries over a possible recession and aggressive monetary tightening in major economies also weighed on sentiment.

The commodity-heavy FTSE 100 fell 0.9% and the mid-cap FTSE 250 dropped 0.1%.

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New British Prime Minister Liz Truss said she would set out plans to tackle soaring energy bills but would not impose a new windfall tax on energy producers.

Shares of oil majors BP and Shell slipped 2% and 1.4% as oil prices fell over 4% to their lowest since Russia invaded Ukraine on demand fears stoked by looming recession risks and downbeat Chinese trade data.

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“Sterling going down is good for the FTSE 100 usually but when oil is down by a big amount, that more than offsets it,” Patrick Armstrong, chief investment officer at Plurimi Wealth said.

“It’s hard to see any good news coming out of the UK in the coming days. So probably global events are going to influence (the sentiment).”

Britain’s battered pound fell to its lowest against the dollar since 1985, as investors dumped British assets in the face of a bleak economic outlook and the soaring dollar.

Mining stocks fell 2.2% on the back of weak metal prices as the greenback strengthened.

Rio Tinto slipped 2% as a U.S. judge said the Anglo-Australian mining giant must face an investor lawsuit accusing it of concealing delays and huge cost overruns at a Mongolian copper and gold mine owned by Turquoise Hill Resources Ltd, in which Rio Tinto has a majority stake.

Shares of AstraZeneca slid 1.1% as Morgan Stanley cut the drugmaker’s rating to “equal-weight” from “overweight.” (Reporting by Johann M Cherian, Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Sherry Jacob-Phillips and Bernadette Baum)

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