The UK stock market slipped into negative territory this morning, tracking declines across Europe. The FTSE 100 index dropped 40 points, or 0.43%, to 9,156, pulling back from the record high of 9,357 reached last month.
Losses were led by UK-focused stocks. Marks & Spencer fell 3.6%, while housebuilders Taylor Wimpey and Barratt Redrow dropped 3.4% and 2.5% respectively. Sainsbury’s also slipped 2.5%.
The selloff was mirrored on the continent, with Germany’s DAX down 1% and both Spain’s IBEX and Italy’s FTSE MIB lower by 0.9%.
Alongside concerns over the bond market, investors appear increasingly anxious about the outlook for US trade policy. Overnight, US Treasury secretary Scott Bessent told Reuters he was confident the Supreme Court would uphold President Donald Trump’s tariffs and overturn a ruling last week that deemed them unlawful.
Bessent added that the White House has alternatives if Trump is prevented from using a 1977 emergency powers law to impose broad tariffs. He pointed to Section 338 of the Smoot-Hawley Tariff Act of 1930, which permits the president to levy tariffs of up to 50% for five months against countries found to be discriminating against US trade.
The mention of Smoot-Hawley is unsettling for markets. The protectionist legislation is widely blamed for exacerbating the Great Depression of the 1930s, making its potential revival a chilling prospect for global investors.
The pound is weakening against the US dollar and is on course for its steepest decline in nearly three months. Sterling, which often reacts sharply to changes in bond market sentiment, has fallen more than 1% against the greenback. So far today it has shed almost 1.5 cents, slipping to $1.34, which would mark its largest one-day fall since the middle of June.
