The City woke to a sea of red this morning as a ferocious sell-off in US technology stocks cascaded across the Atlantic, sending the FTSE 100 into its steepest decline since the mini-Budget fiasco. The Dow Jones Industrial Average cratered 1,200 points overnight, with the Nasdaq Composite suffering its worst session since 2022 as investors fled high-growth names like Apple, Microsoft, and Nvidia. The contagion hit London within minutes of the opening bell, with the FTSE 100 plunging 2.
8% by midday, wiping out all gains made since the start of the year. The rout was driven by a perfect storm of hawkish Federal Reserve commentary, disappointing earnings from Big Tech bellwethers, and a sudden repricing of interest rate expectations. The yield on the 10-year US Treasury note surged above 4.
5% for the first time since November, while the US dollar strengthened against sterling, adding to the pressure on UK importers. 'This is a classic margin call moment,' said one veteran trader, using a colourful metaphor that did little to soothe nerves. 'The market has been drunk on liquidity and AI hype.
Now it's waking up with a terrible hangover.' The sell-off has reignited fears of a global recession, with investors piling into government bonds and gold. The yield on the 10-year UK gilt dropped 12 basis points to 3.
98% as demand for safe havens surged. Meanwhile, the pound sterling slid 1.5% against the dollar, trading at $1.
2350, its lowest level in six months. The Bank of England now faces a stark choice: hold interest rates at 5.25% to support the currency, or signal a cut to bolster growth.
Neither option looks attractive. The capital flight we are witnessing is a vote of no confidence in the government's fiscal plan. With the Spring Statement looming, the Chancellor must convince markets that his spending discipline is more than just talk.
If not, the gilt market could turn hostile again. The tech rout is a reminder that markets are not rational in the short term. But for now, the bottom line is clear: investors are running scared, and London is caught in the crossfire.
