The scent of panic swept through Asian markets overnight as a technology sell-off triggered a cascade of losses, with the FTSE 100 poised to open sharply lower. The Nikkei 225 dropped 4.2%, its worst single-day loss in 18 months, while the Hang Seng sank 3.8% as investors fled growth stocks for safer havens. The trigger: a profit warning from US chip giant NVIDIA, which warned of slowing demand for AI chips, sending its shares down 12% in after-hours trading.
For London, the pain is acute. The capital's tech listings, already trading at a discount to their US peers, now face a fresh wave of selling. Shares in Arm Holdings, which listed in New York last year but maintains a secondary London listing, slumped 8% in pre-market trades. Darktrace, the cybersecurity firm that has been a darling of the AIM market, tumbled 6.5% on fears that its valuation, already stretched at 50 times earnings, could halve. “This is a margin call on overpriced tech,” said Michael Wilson, a fund manager at Jupiter Asset Management. “London’s tech index is a collection of second-tier names that don’t have the same pricing power as their US counterparts. They will be hit hardest.”
The rout raises questions about the London Stock Exchange’s attempts to attract high-growth listings. The government’s recent reforms to simplify listing rules were supposed to lure tech unicorns. Instead, the new rules have allowed a flood of subprime tech firms to list, many of which lack the profitability to weather a downturn. “We’ve opened the floodgates to any company with a pulse and a PowerPoint,” said one City analyst, who spoke on condition of anonymity. “Now we’re seeing the consequences: a race to the bottom as investors realise that most of these firms are burning cash with no clear path to profit.”
Even established tech names are feeling the heat. Sage Group, the accounting software firm, fell 4% despite reporting solid earnings last month. The broader FTSE 100 is expected to open down 1.5%, with financials also under pressure as rising bond yields weigh on bank stocks. The yield on the 10-year gilt jumped 12 basis points to 4.15%, its highest since October, as traders bet that central banks will keep rates higher for longer to combat sticky inflation.
The Bank of England faces a dilemma: tighten further to support the pound and risk crushing growth, or stand pat and watch inflation erode savings. “The BoE is between a rock and a hard place,” said Karen Ward, a strategist at JPMorgan Asset Management. “If they raise rates, they could trigger a recession. If they don’t, they risk a currency crisis. The market is pricing in the former.”
For British investors, the sell-off is a brutal reminder that the era of cheap money is over. The tech rout is not just a correction; it is a repricing of risk. Companies that relied on low interest rates to justify sky-high valuations are now being forced to show actual profits. Many will fail. “This is the hangover after the decade-long party,” said Thorne. “The only question is who will be left standing when the music stops.”
For now, the advice is simple: duck and cover. The sell-off will likely deepen before it bottoms out, and London’s tech listings will bear the brunt of the pain. The government’s grand ambitions to build a ‘British Silicon Valley’ look increasingly like a pipe dream. Instead, the City of London may be stuck with a legacy of failed IPOs and burnt investors. The bottom line is clear: the tech boom is over, and London will be sifting through the wreckage for years to come.
