The UK’s benchmark FTSE 100 index slipped on Friday, pressured by declines in utilities and mining stocks.
The index was also on track to break its three-week winning streak.
The FTSE 100 fell 0.1% to 10,581.06 points.
In contrast, the midcap FTSE 250 index rose 0.1%, putting it on course for a third consecutive week of gains.
Utilities sector under pressure after policy signals
The utilities sector led the losses, falling 2.7%.
The decline followed a report by Financial Times stating that UK Finance Minister Rachel Reeves had pledged to break the link between gas and electricity prices.
This potential policy shift raised concerns among investors about future earnings for utility firms.
Among individual stocks, National Grid and Severn Trent fell 1.3% each.
Meanwhile, SSE and Centrica dropped more than 5%, reflecting broader weakness across the sector.
Mining stocks track weaker metal prices
Mining stocks also contributed to the index’s decline.
Shares of Anglo American fell 1.9%, while Glencore declined 1.3%, tracking softer metal prices, as mentioned in a Reuters report.
Both precious metal miners and industrial mining indices dropped more than 1%, indicating broad-based weakness across the commodities space.
Heavyweight banking stocks saw marginal declines, with the sector down 0.1%.
Although losses were limited, they added to the overall downward pressure on the benchmark index.
Oil majors also traded lower.
Shares of BP and Shell fell 0.5% each.
The decline came as crude oil prices eased on expectations of a potential end to the US-Iran conflict.
Global sentiment improves, but risks remain
Global financial markets showed signs of renewed optimism after Donald Trump signalled confidence that the war in Iran could end soon, with talks potentially resuming over the weekend.
Investor sentiment improved on expectations of a possible diplomatic resolution.
However, the positive mood could face pressure from upcoming economic data that may reflect slowing business activity and rising price pressures.
At the same time, investor focus has shifted towards political developments in Washington, where scrutiny of the Federal Reserve’s leadership may influence interest rate expectations in the coming months.
Fed leadership in focus amid policy uncertainty
Investors are awaiting further clarity on Trump’s nominee to lead the Federal Reserve, with former Fed governor Kevin Warsh set to appear before Congress for his confirmation hearing on April 21.
Warsh faces a challenging backdrop, as Trump continues to push for lower interest rates even as the Iran conflict has driven energy prices higher, fuelling inflation concerns.
Market expectations have shifted notably.
Fed funds futures, which had earlier priced in two quarter-point rate cuts by December, are now indicating virtually no cuts since the conflict escalated in late February, according to Reuters.
Trump has also increased pressure on current Federal Reserve Chair Jerome Powell.
Trump has threatened to remove Powell from his separate board role if he does not step down after his term as chair ends on May 15.
Corporate updates weigh on individual stocks
Among individual movers, Workspace Group plunged 12.5%.
The company said it expects a significant drop in annual profit, which weighed heavily on its share price.
Meanwhile, Associated British Foods slipped 0.4%.
The company is expected to outline plans to separate its Primark fashion business from its food operations.
Mixed outlook for UK equities
While the FTSE 100 struggled, the FTSE 250 showed resilience with modest gains.
The divergence highlights a mixed outlook for UK equities, with sector-specific pressures driving market performance.
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