The FTSE 100 experienced a significant downturn, declining for the second day in a row. Market sentiment is weighed down by a combination of factors, including renewed trade tensions, tariff worries stemming from US policy, and instability in global bond markets triggered by Japanese government bond movements. Furthermore, recent UK economic data has contributed to the prevailing cautious outlook.
- The FTSE 100 fell 0.9% on Tuesday and 0.4% on Monday.
- This marks the worst two-day performance since November.
- Investor unease stems from trade tensions, tariff concerns, and Japanese government bond turmoil.
- UK wage growth remains at 4.7%, while unemployment is at 5.1%, the highest since 2021.
- UK firms cut jobs at the fastest pace since 2020.
- Payroll data revealed a 43,000 drop in employment in December, exceeding expectations.
- Traders have barely adjusted expectations for Bank of England rate cuts.
- Markets see little chance of a reduction in interest rates in the near future.
The observed trends suggest a weakening economic environment for the FTSE 100. The decline in employment and the broader anxieties surrounding trade and global bond markets create a challenging backdrop for the index. The market’s diminished expectation for near-term interest rate cuts further compounds the uncertainty, potentially limiting any immediate upward momentum.