The stock market's recent run of jitters shows no sign of abating. The FTSE 100 is under renewed pressure this morning as a persistent sell-off in technology stocks converges with a fresh wave of attacks in the Middle East. For those of us who track the market's every twitch, it is the classic double blow: a sectoral rout and geopolitical shock.
The tech wreck, which has already erased billions from the likes of Apple and Nvidia, is now infecting London’s own tech-lite index via contagion. Meanwhile, the escalation in the Middle East is sending investors scrambling for safe havens, pushing gold up and bond yields down. The 10-year gilt yield has tumbled to its lowest level in weeks, a clear sign that the market is pricing in a flight to safety.
The question is whether this is a temporary bout of nerves or something more structural in the making. Fiscal hawks like me are watching the government's response with a gimlet eye. Any talk of spending to soothe the markets would be a grave mistake.
The only cure for this volatility is discipline not more debt. The Bank of England is caught between inflation that remains stubbornly above target and a economy that is clearly slowing. Rate cuts are not the answer; credibility is.
For now, the bottom line is simple: the market is repricing risk, and it is not a pretty sight.
