The FTSE 100 (^FTSE) and European stocks followed Wall Street and Asia lower as markets opened on Friday, selling off as a global aversion to risk grips markets and Rachel Reeves appeared to U-turn on plans to hike income tax.
London stocks wavered and British bond yields sold as traders digest more uncertainty around the direction of the UK government’s 26 November budget, with the chancellor pulling back from plans to hike income tax, according to a report by the Financial Times.
Ten-year and two-year UK gilts were volatile following the report. The 10-year gilt yield jumped 0.13% to 4.57%, while the two-year gilt yield added 0.06% to 3.82%.
Reeves has reportedly scrapped widely expected plans to raise the basic and higher income tax rates, the report said. Those plans were relayed to the Office for Budget Responsibility (OBR), the body which scrutinises and forecasts from government policy, on Wednesday.
Read more: Budget 2025: Starmer and Reeves ditch plans to raise income tax
Instead of raising income tax, Reeves is reportedly looking to trim the thresholds at which people pay different rates of income tax, while leaving the headline rates unchanged.
“The problem with not raising income tax is that’s its mechanically the best lever – otherwise, faced with such a large black hole, you have to scratch around with a load of smaller things, pulling all kinds of levers that mess with all sorts of things and probably squeeze growth even more, and you just need to come back for more,” said Neil Wilson, UK investor strategist at Saxo Markets.
“Moreover, the market thinks you lack credibility in terms of filling the black hole and raising headroom.”
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The FTSE 100 (^FTSE) fell 1.1% in early trade. Among equities dragging down the index were banking stocks Lloyds (LLOY.L), Natwest (NWG.L) and Barclays (BARC.L) – each fell around 4%
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The DAX (^GDAXI) in Germany pulled 0.6% lower
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Over in Paris, the CAC 40 (^FCHI) was down 0.5%
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The pan-European STOXX 600 (^STOXX) dropped 0.9%
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The pound rose cautiously against the dollar (GBPUSD=X) hovering just below the $1.32 mark.
FTSE Index – Delayed Quote • USD
9,676.16
-131.52
(-1.34%)
As of 10:29:14 GMT. Market open.
^FTSE ^GDAXI ^FCHI
LIVE 7 updates
- DFS shows resilience
Dan Coatsworth, head of markets at AJ Bell, said:
- FTSE 100 risers and fallers
- Government to ban no-fault evictions from May
A ban on landlords evicting their tenants without reason will come into force in just over six months’ time, ministers have announced.
Landlords will also be prevented from increasing rent more than once a year, while bidding wars between prospective tenants will be outlawed from May 1.
Housing Secretary Steve Reed insisted the Government was “calling time” on “rogue landlords” by initiating a raft of measures in the Renters’ Rights Act.
Ministers have set out a timeline for implementing the Act on Friday, with the aim of giving landlords and letting agents time to see through the changes for their tenants.
From next May, the first tranche of law changes will be introduced.
These include a ban on so-called “no-fault” section 21 evictions, as well as a ban on asking for more than one month’s rent in advance when a tenancy begins, and a halt to bidding wars between tenants.
Landlords will also no longer be able to discriminate against tenants for being on benefits or having children, and will not be able to unreasonably refuse requests from their tenants to own pets.
- Bitcoin rout deepens
Bitcoin (BTC-USD) pulled further below the symbolic $100,000 threshold on Friday morning, mirroring jitters on Wall Street after a punishing 30 day stint for the digital asset.
Compared with the same point 30 days ago, the largest digital asset has lost 13.9%. It’s trading around the $97,340 mark this morning, down almost 6% in the last 24 hours.
Factors that have historically supported the price, such as payments into large investment funds, ETF allocators, and corporate treasuries, have taken a step back amid volatility.
- US stock futures in the red
Our US team writes:
US stock futures fell Friday morning as investors failed to recover from Wall Street’s sharpest sell-off in more than a month.
Contracts tied to Dow Jones Industrial Average (YM=F) lost 0.2%, while S&P 500 (ES=F) ticked down 0.3%. Futures for the Nasdaq 100 (NQ=F) slipped roughly 0.4% as the tech rout for the week looks set to deepen.
The dip follows a bruising session for US equities. All major indexes logged their steepest one-day declines in over a month. The Dow (^DJI) erased record-setting gains that had put it above 48,000 for the first time, while the Nasdaq Composite (^IXIC) led declines as heavyweights Nvidia (NVDA), Broadcom (AVGO), and Tesla (TSLA) all tanked.
Uncertainty around the Federal Reserve’s next policy move has begun to weigh on sentiment, as a jubilant mood from the end of the six-week government shutdown prompts fresh questions about the state of the US economy. Traders now see a roughly 52% chance of a quarter-point rate cut in December, down sharply from nearly 63% just a day earlier and more than 95% a month ago.
- Good morning!
Hey there! Lucy Harley-McKeown here — ready to bring you the latest economics and markets news of the day. Apart from the usual government chaos over tax policy, this morning we have news of a freshly elected Novo Nordisk (NVO) chairman.
There’s also EU GDP on the diary as well as the US PPI inflation rate.
In terms of earnings, expect quarterly updates from:
Let’s get to it.