(Reuters) -London's FTSE 100 slipped on Wednesday as investors weighed mounting fiscal concerns, pointing to sticky inflation and potential tax hikes by the UK government, while digesting a mixed bag
UK's FTSE 100 slips on fiscal worries ahead of GDP data; Burberry shines
Market Overview and Economic Outlook
By Sanchayaita Roy
Impact of GDP Data on Interest Rates
(Reuters) -London's FTSE 100 closed lower on Wednesday as investors were cautious ahead of domestic GDP data due Thursday, with fiscal concerns including sticky inflation and the prospect of tax hikes weighing on sentiment.
Sector Performances: Luxury vs. Defense
The benchmark FTSE 100 fell 0.3%, while the domestically focused FTSE 250 was down 0.03%.
Burberry's Strong Performance
Focus will be on the UK's gross domestic product estimate for August which could offer clues on the Bank of England's interest rate path after policymakers held rates steady at 4% last month.
Challenges for Aerospace and Defense Stocks
"UK GDP is expected to expand by 10 basis points in August. Although the magnitude of the rise won't register on the Richter scale, this would continue the stretch of economic expansion to three consecutive months, a welcome development," said Michael Field, chief equity strategist at Morningstar.
"Inflation remains high, as do interest rates, as the BoE awaits assurance that inflation is under control before cutting further."
On Tuesday, the International Monetary Fund said the BoE must be "very cautious" while considering future rate cuts as the country's inflation is projected to be the highest among the Group of Seven advanced economies in both 2025 and 2026.
Meanwhile, Britain's finance minister Rachel Reeves said she was looking at both tax rises and spending cuts for her budget on November 26.
In the market, LVMH, a bellwether for the luxury sector, reported better-than-expected sales in the third quarter, which positively impacted other luxury stocks.
UK's Burberry advanced 3.3% and was among top gainers in the FTSE 100 while the broader personal goods sector outperformed peers by 3.6% gain.
PageGroup rose 3.4% after the recruiter posted third-quarter results that beat profit expectations.
Conversely, aerospace and defense stocks declined for the fifth consecutive session with BAE Systems leading losses on the FTSE 100.
Entain fell 2.4% after the British gambling firm reported a slowdown in gaming revenue in the third quarter.
Shares of Beazley dipped 2.5% with the broader non-life insurers index leading sectoral losses with 1.7% losses.
(Reporting by Sanchayaita Roy and Avinash P in Bengaluru; Editing by Leroy Leo, Alexandra Hudson)
