- FTSE declines 109 points to 9,698
- SSE downgraded
- Wall Street down, with Dow hit hardest
5.02pm: Another losing day
The FTSE finished the week only slightly better than it started it, despite hitting new record highs close to the 10,000 level. The index shed another 109 points at 9,698.
“Pared back December rate cut expectations amid hawkish Fed comments, increasing concerns about tech sector valuations and upcoming US data, now that the government shutdown has ended, have plagued stock markets on the last day of the week,” IG senior technical analyst Axel Rudolph said.
“Cryptocurrencies saw their fourth straight day of declines with Bitcoin falling by close to 5% and trading in six-month lows around $96,000, though."
3.33pm: Some respite... just not much
After hitting a session low around midday, the FTSE 100 has pared some of the losses endured during a bloody early session. Even so, it is still down in triple digits, to the tune of around 125 points, as the wobbles in the US over the longevity of the AI-backed tech boom continue.
On Wall Street, the Nasdaq, off 0.6%, seems to be faring better than the Dow, a barometer of the old economy, which is off 475 points, or 1%.
There is a political and fiscal dimension to the convulsions.
In the States, the anxiety has been heightened by the growing fear the Federal Reserve may delay a further cut to interest rates as it is forced to navigate without key data.
That is because the White House has said key inflation and jobs prints for October are unlikely to be released.
Here in the UK, the amazing U-turning Chancellor, Rachel Reeves, has put the equity and bond markets in a spin with a seeming tax volte-face as Labour attempts to head off a revolt by backbenchers.
Happy Friday, everyone.
1.55pm: Party over for SSE?
If you ever needed proof that markets can party too hard on a and wake up deeply embarrassed, SSE just provided the case study.
Citi, arriving like the sensible friend with a jug of water and a lecture, has cut the stock to 'sell' and the shares duly slipped 2.3% to 2,211p.
Citi’s message is essentially: calm down, everyone.
The equity issue has cleared the near-term fog, and the 2029/30 earnings-per-share ambition of 225 to 250p gives analysts something solid to plug into their spreadsheets.
But the stock has been behaving like it has discovered a new law of physics, rising 18% in the last five trading days and close to 40% over two months.
Citi argues the rally is out of sync with reality. Consensus earnings are unlikely to shift much, with Bloomberg’s 2029/30 estimate at 233p, while the valuation now implies a 65% premium to the regulated asset base or roughly 10 times enterprise value to renewables EBITDA.
The dividend yield is also slipping below 3%. Add a decade of falling renewable output and ongoing uncertainty over the electricity distribution sale, and the exuberance starts to look misplaced.
Hence the verdict: Sell, with a twelve-month price target of £19.97. SSE has had a great run, but Citi thinks the sugar rush is wearing off.
12pm: Wall Street set for bleak start
US markets are expected to extend their losses when trading gets under on Friday, with the Nasdaq bearing the brunt of the negative sentiment.
Nasdaq futures are 1.1% lower, with those for the S&P 500 and the Dow Jones down 0.7% and 0.5% respectively.
Tech stocks led Wall Street lower amid concerns about AI valuations and that the Fed may hold off cutting rates in December in the wake of the US government shutdown. The Nasdaq fell 2.3%, and the Dow Jones and the S&P 500 both declined 1.7%.
Meanwhile, the Footsie has extended its losses and is now 196 points down at 9,611.96, a loss of 2%.
10.30: Gilts up, banks down
The UK market is juggling its own troubles beyond the AI bubble worries. Speculation that Chancellor Rachel Reeves is backtracking on Budget plans has rattled the bond market, pushing gilt yields higher – bad news for mortgage costs and housing.
The 10-year gilt yield jumped 0.13% to 4.56%, while the two-year gilt yield added 0.06% to 3.82% following reports the Chancellor has dropped plans to raise income tax rates in her Autumn Budget at the end of the month.
"Higher gilt yields can drive up fixed-term mortgage costs because they are used as a benchmark by lenders when pricing long-term products," commented AJ Bell's Dan Coatsworth.
"The situation is bad news for mortgage lenders as pricier home loans could make it more challenging for certain people to get on the housing ladder."
Banks took a hit, with Lloyds and NatWest sliding, while housebuilders Berkeley Group Holdings PLC (LSE:BKG), Barratt Redrow PLC (LSE:BTRW) and Persimmon PLC (LSE:PSN) also tumbled.
The FTSE 100 is now 134 points down at 9,673.89.
9.15am: Changing narrative
Investors have begun to question whether the year’s big drivers — AI enthusiasm and hopes for rate cuts — have gone too far, according to interactive investors' Richard Hunter.
“US stocks endured a bruising session with emerging signs that the investor narrative is changing, as opposed to any clear deterioration in fundamentals,” commented Hunter.
On the back of that, tech names led the declines on Wall Street overnight, while worries grew that the Federal Reserve may delay cuts due to patchy data.
On the London market, the previous outperformers of the recent rally, such as the banks and the miners, are leading the decline today.
The FTSE 100 is now 103 points down at 9,704.40.
In Frankfurt, the DAX is 0.7% lower, while the Paris CAC 40 has shed 0.4%.
8.35am: Bitcoin loses more ground
Bitcoin has continued its decline below the magic $100,000 mark, sliding 2.8% this morning to $96,909.49.
Tickmill Group's Patrick Munnelly says Bitcoin is being impacted by the new wave of risk aversion and a downturn in tech stocks that has revived concerns on Wall Street.
The cryptocurrency dropped by as much as 3.9%, deepening a decline that has erased over $450 billion in value since early October, Munnelly noted.
"Previously reliable support sources—such as major investment funds, ETF investors, and corporate treasuries—have retreated, taking away a crucial support pillar for this year's rally and initiating a fresh period of market vulnerability," he added.
8.15am: Sticky start for the Footsie
The FTSE 100 fell sharply at the open on Friday in a sell-off sparked by worries over tech-stock valuations and concern that the US Federal Reserve won't cut rates in December in the absence of vital economic data following the longest government shutdown on record.
London's blue-chip index shed 104 points, or 1.1%, to 9,703.42 in the first 15 minutes of trade.
Land Securities Group PLC (LSE:LAND) led the decliners, down 3.7%, despite lifting guidance for net rental income growth to 4-5% for FY26. Analysts noted a decline in underlying profit, reflecting continued asset revaluations and sector volatility.
Lloyds Banking Group PLC (LSE:LLOY) shed 3.6% in early trade, NatWest Group PLC (LSE:NWG) and Barclays PLC (LSE:BARC) also slid more than 3%.
Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) fell 3.3%, retracing some of Thursday's strong gains after it reported strong third-quarter results.
Leading the gainers, Burberry Group PLC (LSE:BRBY) jumped 2.2%, a day after the British fashion house reported a return to like-for-like sales growth in the second quarter.
8am: A reckoning brewing?
More on yesterday's sharp fall on Wall Street, its worst day in a month, as the tech sell-off deepened amid fears the AI-fueled rally has gone too far.
The S&P 500 now trades at a PE of 23, well above its historical average of 18.
Even legendary investor Michael Burry has thrown in the towel, liquidating his funds after shorting names like Nvidia, admitting valuations are "not in sync with markets."
Swissquote's Ipek Ozkardeskaya notes institutional traders are piling into shorts, setting up a showdown: can retail bulls hold long enough to squeeze the bears, or is a reckoning brewing?
7.15am: FTSE called lower
The FTSE 100 is predicted to open lower as a month-long rally comes to an end amid signs that the Federal Reserve may hold off on cutting interest rates in the wake of the US government shutdown.
London's blue-chip index has been called 68 points lower on the futures market, building on yesterday's 104-point slide to 9,807.68, a loss of just over 1%.
US stocks also declined, with the Nasdaq ending 2.3% lower, and the Dow Jones and S&P 500 both shedding 1.7%.
"What likely triggered yesterday’s selloff was the growing realisation that a full set of jobs and inflation data won’t land before the Federal Reserve’s (Fed) December meeting," commented Swissquote senior analyst Ipek Ozkardeskaya. "And if that’s the case — and if the Fed retains even a minimum degree of independence and reason — it wouldn’t cut rates blindly."
Asian markets are also weaker this morning. In Tokyo, the Nikkei has dropped 1.7%, Hong Kong's Hang Seng is down 1.9% and Shanghai's is 1% lower. Mumbai's BSE Sensex is 0.3% off the pace, while the ASX 200 in Sydney is down 1.4%.