​​​UK markets under pressure as political risk builds

​The FTSE 100 fell around 0.4% as United Kingdom (UK) assets came under renewed pressure. Sterling weakened 0.3% towards $1.36, making it the worst-performing G10 currency on the day. Political uncertainty and a cautious global backdrop weighed on sentiment ahead of the Bank of England (BoE) decision.

​Gilt yields pushed higher, with ten-year rates hitting their highest level since late November. The gap between 2-year and 10-year yields widened to its steepest since 2018, as a political risk premium crept into UK government debt. This curve steepening reflects growing unease about fiscal policy and longer-term economic prospects.

​Vodafone suffers worst drop in a year

Vodafone shares plunged as much as 6.8%, marking the stock's worst single-day decline in a year. The culprit was German service revenue, which missed expectations and raised questions about the company's most important market. After exiting southern Europe and integrating its UK merger with Three, Germany now carries more weight than ever.

​BT shares moved in the opposite direction, jumping more than 3% after showing signs that customer losses are stabilising. The divergence between the two telecoms giants highlights how individual company execution matters more than sector trends. Vodafone's operational misstep overshadowed yesterday's record highs and reaffirmed guidance.

​Investors had priced in a turnaround narrative, but today's numbers suggest that story may have run ahead of reality. The German weakness is particularly concerning because it undermines confidence in Vodafone's ability to deliver sustained growth in its core markets. Competitive pressures in European telecoms remain intense, and pricing power is limited.

​Wall Street tech rout deepens on AI valuation fears

​Wall Street finished mixed, with the S&P 500 down 0.51% and the Nasdaq 100 sliding 1.51%. The Dow Jones rose 0.53%, as investors rotated into value and defensive stocks. But the real story was the intensifying sell-off in AI-related names, as concerns over stretched valuations and rising costs began to bite.

​Advanced Micro Devices plunged 17% after issuing a weak revenue outlook, dragging NVIDIA down 3.4% and pushing the Philadelphia semiconductor index lower by 4.4%. Software stocks followed, with Palantir tumbling nearly 12% and Snowflake extending its decline. Alphabet's sharply higher capex plans added fuel to the fire, raising questions about the returns on massive AI investment.

​Not all earnings disappointed. Eli Lilly surged about 10% on strong profit guidance, while Super Micro Computer jumped nearly 14% on optimism around AI server demand. But these bright spots couldn't offset the broader tech weakness. The market is beginning to ask whether AI winners are narrowing, and if the hype has outrun fundamentals.

​Asian markets extended the rout, with South Korea's KOSPI down nearly 4% and Japan's Nikkei 225 off 0.7%. The global nature of this sell-off suggests more than just profit-taking – investors are genuinely reassessing the AI trade and rotating out of high-multiple growth stocks.

​Commodities and crypto extend losses

​Commodities sold off sharply, with silver tumbling around 13% in another volatile session for precious metals. Forced selling appears to be driving the move, as leveraged positions unwind. Oil prices fell nearly 2% on signs of renewed United States (US)-Iran talks, easing geopolitical risk premiums that had supported crude in recent weeks.

​Shell reported quarterly profit below forecasts, with weaker oil trading and chemicals dragging on results. The company announced another $3.5bn buyback, keeping shareholder returns in focus, but the miss underscores how even energy majors struggle to deliver consistent growth when macro conditions shift.

​Mining stocks weighed on the FTSE, with Anglo American cutting 2026 copper production guidance and warning its De Beers diamond unit will make a loss.

Bitcoin fell 3.4% to its lowest level since November 2024, extending the pullback in risk assets. The cryptocurrency's decline mirrors the weakness in tech stocks, as speculative positioning gets unwound.

​What traders should watch next

​The Bank of England (BoE) decision looms large, with markets pricing in a cautious stance and political risk premium already reflected in gilt yields. Any dovish surprise could weaken sterling further, while a hawkish hold might provide temporary support. Either way, volatility in UK assets is likely to persist.

​In the US, earnings season continues, and investors will scrutinise tech results for further evidence of AI spending fatigue. If more companies follow AMD's lead with weak guidance, the Nasdaq sell-off could deepen. Conversely, strong results from AI infrastructure plays could stabilise sentiment and attract bargain hunters.

​Commodities remain under pressure, but oversold conditions in silver and industrial metals may present short-term trading opportunities. Oil's decline on easing geopolitical risk suggests further downside unless supply cuts materialise or demand picks up unexpectedly.