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London's stock market took a significant hit on Friday, heading for weekly losses as surging government bond yields unsettled investors. The decline followed reports that the UK government had abandoned plans to raise income taxes in the upcoming budget. The FTSE 100, the UK's leading blue-chip index, marked its sharpest one-day drop since April 9, when global markets were shaken by tariff announcements from then-U.S. President Donald Trump. Similarly, the FTSE 250, which tracks domestically focused companies, is heading for its worst single-day performance since late September.

Market turmoil was triggered by news that British Finance Minister Rachel Reeves had decided to scrap proposed income tax increases in the forthcoming budget. The move raised concerns about the government’s ability to meet fiscal targets, eroding investor confidence. Consequently, UK government bond yields surged, exacerbating market anxiety. The sell-off extended across various asset classes. The British pound slipped nearly 0.25%, while equities suffered broad-based declines. Banking stocks were hit hardest, plummeting 3.3%, and precious metal miners dropped 4.4% as gold prices softened. Global markets faced additional pressure from hawkish remarks by U.S. Federal Reserve officials on Thursday, which dampened hopes of an interest rate cut in December. Concerns over U.S. economic data and fears of a potential bubble in artificial intelligence investments added to the uncertainty. In the UK, the aerospace and defence sector declined 2.6%, with Rolls-Royce sliding more than 2% for a second consecutive session. Melrose Industries, the parent company of GKN Aerospace, also fell 2.6% after reaffirming its full-year guidance.

The investment banking and brokerage sector endured a challenging week, dropping 2.6% on Friday and recording an 11% weekly decline—the steepest among all sectors. Land Securities, a commercial property firm, reported a drop in property valuations for the first half of its fiscal year, sending its shares down 5.4%.Amid the widespread losses, there was a rare bright spot as shares of PPHE Hotel Group surged 13.5%. The hospitality company’s stock soared on news that key investors were considering selling their stakes. The energy sector managed to limit its losses, supported by a rise in oil prices after a Ukrainian attack disrupted exports at a Russian port.

TECHNICAL & TRADE VIEW - FTSE100

• Daily VWAP Bearish
• Weekly VWAP Bullish
• Above 9810 Target 9945
• Below 9702 Target 9580

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