The London Stock Exchange took a hit this morning as a sharp sell-off in US Big Tech stocks sent shockwaves across global markets. The FTSE 100 opened down 1.8%, its worst single-day drop in three months, driven by a rout in technology shares on Wall Street overnight.
The Nasdaq Composite plunged 3.5% as investors fled high-growth equities amid rising bond yields and fears of persistent inflation. This is not merely a correction; it is a signal that the era of cheap money is ending.
The Bank of England’s tightening cycle is already a drag on UK equities, but contagion from the US tech sector amplifies the pain. Gilt yields surged again this morning, with the 10-year touching 4.5%, its highest since 2008.
The market is finally pricing in the reality that central banks will keep rates higher for longer. Capital flight is accelerating: foreign investors are pulling money out of UK equities and bonds, seeking refuge in the dollar. The British pound is down 0.
6% against the greenback, adding to the inflation headache for importers. The government’s insistence on fiscal spending is not helping. The Chancellor’s recent budget promises more borrowing, which spooks bond vigilantes.
The market is voting with its feet. For now, the only safe harbour is cash. But as history shows, that too can burn in an inflationary fire.
