The FTSE 100 declined sharply on Friday as a global sell-off in technology stocks spread to European markets, with concerns over artificial intelligence investment, geopolitical uncertainty and higher interest rates weighing on investor sentiment.
London’s benchmark index fell 1.5% by 08:25 GMT, following substantial losses on Wall Street and across Asian equity markets.
Germany’s DAX dropped 1.43%, while France’s CAC 40 declined 1.20%. Sterling also weakened, falling 0.47% against the US dollar to $1.3401.
The declines followed a difficult session for US equities on Thursday, when the S&P 500 lost 4.4% and the technology-heavy Nasdaq Composite fell 5.5%.
Global Technology Sell-Off Extends Across Asia and Europe
Concerns surrounding the scale and profitability of artificial intelligence investment continued to affect global equity markets following the US midterm elections.
Asian stocks suffered substantial losses, with Japan’s Nikkei and South Korea’s KOSPI both closing approximately 6% lower.
Investment bank Jefferies warned that a rapid recovery appeared unlikely, citing the largest wave of retail investor selling since the COVID-19 pandemic.
The sell-off has increased market uncertainty as investors reassess technology valuations and the outlook for corporate investment in artificial intelligence.
Attention is also turning to US employment figures scheduled for release later on Friday, which could influence expectations for Federal Reserve monetary policy.
Bank of England Rate Increase Adds to Economic Concerns
UK markets continued to assess the Bank of England’s decision on Thursday to increase its benchmark interest rate to 4%.
All nine members of the Monetary Policy Committee supported the increase, reflecting concerns about persistent inflation.
The central bank expects inflation to reach a peak of 4.9%, adding pressure to household finances and borrowing costs.
According to ING, financial markets are pricing in approximately a 50% probability of another interest rate increase in December.
ING expects a further increase by February 2027, potentially sooner if energy prices rise again.
Jefferies, however, does not anticipate another rate increase in December.
The differing forecasts highlight uncertainty surrounding the direction of UK monetary policy as policymakers attempt to contain inflation without placing additional pressure on economic activity.
Middle East Conflict Keeps Investors Focused on Energy Markets
Geopolitical developments in the Middle East remained a significant influence on market sentiment.
Qatar’s emir and US President Donald Trump discussed diplomatic efforts towards a comprehensive agreement, according to the Qatari Emiri Diwan.
However, tensions remained elevated after Iranian military officials warned of potential attacks against US assets if Iran faced further military action.
Iranian army spokesman Mohammad Akraminia also indicated that the Strait of Hormuz would reopen only if Tehran’s seven conditions were satisfied.
Separately, Iran’s Revolutionary Guards reported that two oil tankers had caught fire after striking mines, according to the Tasnim news agency.
Trump warned that further US military action against Iran remained possible, while diplomatic efforts continued through Qatar.
Reports differed on the status of nuclear proposals exchanged between Washington and Tehran, suggesting that significant disagreements remained.
Iranian official Mohsen Rezaei also met Russian President Vladimir Putin on Thursday, with Moscow expressing support for efforts to reduce tensions.
UK House Prices Record Sharpest Monthly Decline in a Year
Domestic economic data added to concerns about the outlook for the UK economy.
Figures from Lloyds showed that average UK house prices declined 0.6% in October, the steepest monthly fall in at least a year.
Property prices in London were 3.1% lower than a year earlier, reflecting continued affordability pressures in the capital.
Mortgage approvals also fell 19.4% year on year, highlighting the impact of higher borrowing costs on housing demand.
Lloyds expects subdued market conditions in the near term but does not anticipate a prolonged period of declining house prices.
The figures reinforced concerns about the impact of elevated interest rates on consumer confidence and residential property activity.
Oil and Gold Prices Decline Amid Market Volatility
Commodity markets also moved lower as investors assessed geopolitical developments and the outlook for global demand.
Brent crude futures declined 0.67% to $97.66 per barrel, while US West Texas Intermediate futures fell 0.76% to $89.81.
Gold prices weakened despite the broader market uncertainty.
Gold futures dropped 0.87% to $4,077.55 per ounce, while spot gold declined 0.51% to $4,067.79.
The movements came as investors continued to monitor Middle East developments, interest rate expectations and global financial market volatility.
UK Corporate News: MJ Gleeson, Rightmove and IAG
MJ Gleeson (LSE:GLE) warned that its first-half performance for the 2027 financial year was likely to be weaker as subdued housing demand affected sales activity.
The housebuilder also highlighted the possibility that buyers could delay purchases or cancel reservations ahead of the anticipated April launch of the Government’s Your First Home scheme.
The company indicated that achieving full-year market expectations would depend on improved trading during the second half.
Rightmove (LSE:RMV) narrowed its full-year 2026 revenue growth forecast to between 6% and 7%, compared with its previous guidance of 6% to 8%.
The property portal expects revenue growth in 2027 to remain broadly similar to 2026, reflecting continued pressure from higher mortgage rates, weaker housing affordability and reduced spending by new-build developers.
Despite these challenges, Rightmove raised its 2026 underlying earnings per share growth forecast to at least 7%.
International Airlines Group (LSE:IAG) expects full-year capacity to be slightly below 2025 levels following flight suspensions and operational disruptions affecting Middle East routes.
The British Airways and Iberia parent reported third-quarter operating profit below market expectations, although strong forward bookings and passenger yields continued to support demand.
IAG maintained its full-year operating margin target of at least 12%, despite higher fuel costs and operational pressures.
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