FTSE 100 edges lower amid oil price weakness and elections

The UK's benchmark FTSE 100 index edged lower on Thursday as a stronger pound weighed on multinational companies, while losses in oil majors Shell Plc and BP Plc added further pressure to the market.

Investors also monitored local and regional elections across Britain.

The blue-chip FTSE 100 index fell 0.6% to 10,380 points by 1112 GMT, while the mid-cap FTSE 250 index gained 0.5%.

Elections add political uncertainty

Britons headed to the polls in local and regional elections that could deal a major setback to Prime Minister Keir Starmer and the Labour Party.

The elections could renew scepticism about Starmer’s ability to govern and may also signal the beginning of the end of Britain’s traditional two-party political system.

Political developments remained in focus for investors alongside ongoing concerns about inflation and the broader economic outlook.

A recent survey showed that British builders experienced one of the biggest month-on-month increases in cost inflation during April, highlighting persistent pricing pressures in the economy.

Stronger pound pressures overseas earners

The pound strengthened against the US dollar on Thursday as investors assessed developments related to the Iran conflict while also keeping a close watch on British local elections that could pile pressure on Prime Minister Keir Starmer.

The pound was last trading 0.2% higher at $1.3621, extending gains after rising 0.4% in the previous session.

Market sentiment improved after reports indicated that the United States and Iran were moving closer to reaching a limited temporary agreement aimed at de-escalating the conflict.

The stronger currency pressured multinational firms that generate a significant portion of their revenue overseas.

Markets were also closely watching the ongoing earnings season to assess consumer demand trends.

Oil majors drag the FTSE 100 lower

Shares of Shell Plc dropped 2% despite the company reporting its highest quarterly profit in two years and announcing a dividend increase.

Meanwhile, rival BP Plc fell 1.4% as declining oil prices weighed on investor sentiment.

The oil prices slipped below $100, adding pressure to energy stocks.

Defence company BAE Systems plc was also among the biggest drags on the FTSE 100.

Its shares declined 3% after the company maintained its full-year outlook.

Hotel and telecom shares outperform

On the positive side, shares of InterContinental Hotels Group rose 2.7% after the company exceeded quarterly room revenue estimates.

The company’s US business rebounded during the quarter.

Autotrader Group Plc gained 4% after a source told Reuters that activist investor Palliser Capital had built up a stake of up to 2% in the company.

Among mid-cap stocks, Helios Towers Plc jumped 16%, providing a strong boost to the FTSE 250 index.

The mobile tower operator raised its annual profit forecast, driving investor optimism.