The FTSE 100 opened the week with a slight decline, shedding 0.1% to 10,360.11 during early London trading. Market sentiment was dampened by renewed political uncertainty in the United Kingdom.
Political Turmoil Weighs on Sentiment
Investor confidence was shaken by developments within Prime Minister Keir Starmer's administration, including the departure of his chief of staff and a diplomatic dispute. This political instability pressured UK assets, with the pound holding steady at $1.3607 against the dollar while the 10-year gilt yield reached 4.554%.
Corporate Moves Drive Individual Stock Action
NatWest Group shares dropped 4.5% after the bank announced its agreement to acquire wealth manager Evelyn Partners for £2.7 billion. Concurrently, the bank unveiled a £750 million share buyback program. Analysts offered mixed views on the transaction, with some calling it transformational while others expressed concerns about the price and potential earnings dilution through 2028.
Greggs shares fell approximately 4% after Jefferies downgraded the bakery chain from "buy" to "hold" and reduced its price target to 1,610 pence. The broker cited growing usage of GLP-1 weight-loss drugs as a potential long-term headwind for consumer demand.
Broader Market Context
Globally, market conditions stabilized somewhat with a rebound in semiconductor stocks providing support for risk assets. Investors remained cautious ahead of key U.S. economic data releases scheduled for the week, including employment, inflation, and spending figures that could influence Federal Reserve policy.
Commodity markets saw notable moves, with gold surpassing $5,000 per ounce and Brent crude oil trading near $68 per barrel. The FTSE 100's heavy weighting toward multinational companies provides some insulation from domestic UK issues, but rate-sensitive sectors remain vulnerable to shifts in monetary policy expectations.
