Market Turmoil: UK Shares Drop Amid Fiscal Concerns
UK shares fell sharply on Tuesday as concerns over public finances weighed heavily on rate-sensitive sectors like banks, utilities, and industrials. The FTSE 100 dropped by 0.9%, the worst in nearly five months, while the sterling and 30-year gilt yields reflected growing investor anxiety over the economic outlook.
On Tuesday, UK shares took a hit due to growing investor concern over the nation's public finances, causing a downturn in rate-sensitive sectors including banks, industrials, and utilities. The FTSE 100 decreased by 0.9%, marking one of its worst days in nearly five months, while the midcap index dropped 2.2% amidst rising economic uncertainty.
The nation's fiscal worries were further evidenced as Britain's 30-year borrowing costs soared to levels unseen in over 27 years, with gilt yields escalating to 5.72%. Meanwhile, sterling suffered a plunge of more than 1.5%, as investors fretted over the UK's financial stability and fiscal strategies.
Adding to the volatile atmosphere, Prime Minister Keir Starmer conducted a reshuffle of his advisory team, infusing economic expertise ahead of an anticipated budget rollout. While these changes aim to enhance economic insight, they have sparked controversy around finance minister Rachel Reeves' influence on policymaking, leading to fears about the potential impact on the nation's already fragile economy.
(With inputs from agencies.)
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