UK stocks drop out 1% eyeing on new PM

UK’s main stock indexes dropped by one percent on Monday as investors awaited the announcement of a new prime minister later in the day amid the country faces a cost of living crisis, industrial disturbances and recession.

Major index such as FTSE 100 1.1 percent and the domestically oriented FTSE 250 retreated at 1.3 percent.

UK will announce the new prime minister today at 11.30 GMT as the competition is between Foreign Secretary Liz Truss or former Finance Minister Rishi Sunak.

The investors are worried that tax cuts promised by Truss could aggravate Britain’s inflation problem, speeding up the Bank of England’s interest rate hikes and worsening a recession that the BOE expects to start this year.

The rate-sensitive banking sector (.FTNMX301010) declined 1.4 percent.

The pound fell for its seventh straight session and remained close to its pandemic trough.

This affect European stocks after Russia extended a halt to flows on the Nord Stream 1 gas pipeline to Europe, adding to fears of winter fuel shortages.

Oil majors Shell and BP fulfilled slight increase on firm crude oil prices as investors eyed possible moves by OPEC producers to cut output and support prices at a meeting later in the day.