Citigroup has downgraded its recommendation for UK stocks to underweight, citing a decline in market appeal as geopolitical tensions ease and commodity prices fall.

Citigroup noted that the London Stock Exchange is heavily focused on energy companies and defense sectors, which made it outperform during the war period, but it has become less attractive as earnings growth broadens in other markets.

It explained that the FTSE 100 index has fallen by about 1% since the announcement of the ceasefire between the United States and Iran, compared with a rise of about 6% in the Euro Stoxx 50 index, a jump of about 12% in the S&P 500 index, and an increase of about 20% in the Japanese Nikkei index over the same period.

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