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UK stocks near 1-year lows; energy, mining shares drop

written by Bella Palmer
mining

The benchmark FTSE 100 index declined 0.8% and the domestically-focused FTSE 250 index finished down 1.1%

UK's main stock indexes dropped on Wednesday with mid-cap stocks nearing one-year lows as Spirent Communications dipped following a profit warning, while weak energy and mining shares dragged down the commodity-heavy FTSE 100 for the third consecutive day.

The benchmark FTSE 100 index declined 0.8% and the domestically-focused FTSE 250 index finished down 1.1%.

The energy sector dropped 2.5%, tracking weak crude prices as demand concerns arising out of macroeconomic headwinds offset pledges by Saudi Arabia and Russia to continue crude output cuts to the end of 2023.

Worries about global growth also weighed on UK equities after bond yields rallied on speculations that interest rates will have to stay high to control inflation.

Heavyweight industrial metal miners shed 1.8% as copper prices dropped to their lowest in over four months.

Tesco added 4.3% after the country's biggest retailer raised its annual profit forecast and hinted that food inflation would continue to drop.

Tesco's progress has been incredible, and largely possible because of its immense scale, said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

The real test will be Christmas, where consumers will want to put on as much of a feast as possible, but where wallets may not permit it. We could be faced with a race to the bottom on festive pricing, which could spell trouble for margins.

Shares of Spirent Communications dropped 31.3% to lead declines on the midcap index after the telecoms testing services provider warned of lower annual profit.

Fashion retailer Superdry climbed 17.8% on news that it would sell its intellectual property assets in South Asia to Reliance Retail.

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