London Markets Tumble Prior to Budget Reveal, with Hipgnosis Hitting Historic Low

On Monday, UK stocks began the week with pessimism, experiencing a widespread sell-off across various sectors, except for precious metal mining and defense companies. This market movement comes just days before the government is scheduled to release its national budget.

Hipgnosis Songs Fund, well-known for its investment in music royalties, experienced a significant blow as its share price plunged to an all-time low, decreasing by 8.2%. The firm announced an indefinite suspension of its dividends, amidst plummeting asset valuations, leaving shareholders without the regular income they had come to expect.

The leading FTSE 100 index dipped by 0.6%, while the FTSE 250, which includes mid-sized companies, saw a 0.5% drop.

Investor Sentiment Shaken by Hipgnosis Dividend Halt

In a comment on Hipgnosis' halted dividend payments, investment director Russ Mould stated that the charm of investing in a music royalties fund, anticipated for easy income, had vanished for its shareholders.

As investors brace for the upcoming budget, expected on Wednesday, there is heightened scrutiny on the finance minister's financial plans, including possible tax reductions and insights into the UK’s economic state. With inflation showing signs of receding, this budget could influence investor sentiment moving forward.

Sectoral Impact and Market Performance

Segments such as automobiles, personal goods, and chemicals were among the hardest hit in the market, reporting downturns between 1.6% and 2.7%.

Despite a general underperformance of the FTSE 100 index compared to global equities, largely due to its minimal technology sector presence, precious metal miners stood out with a 3.2% rise, capitalizing on the climbing gold prices driven by expectations of a U.S. Federal Reserve rate cut in June.

Ocado, an online grocery platform, witnessed a steep decline at the bottom of the FTSE 100, following a price target reduction by Morgan Stanley. Similarly, packaging company Mondi saw its shares drop by 2.0% amidst news of reevaluating its acquisition offer for competitor DS Smith, which also saw its shares fall.

London, stocks, Hipgnosis