Markets tumble as tech sell-off sparks fresh volatility

​​​Tech sell-off drags global markets lower

​The week's dramatic reversal in sentiment caught many investors off guard. After months of relentless gains in artificial intelligence (AI)-related stocks, cracks finally appeared in the narrative. Markets that had shrugged off valuation concerns suddenly found themselves questioning whether the AI boom had run too far, too fast.

​European indices bore the brunt of the sell-off, with the STOXX 600 heading for its biggest weekly decline since March. Technology sectors faced the heaviest pressure, as investors who had piled into momentum trades rushed for the exits. The speed of the reversal suggested that positioning had become stretched, leaving markets vulnerable to any shift in sentiment.

​US tech stocks led the decline, with the reversal particularly pronounced among the mega-cap names that had driven gains throughout the year. What started as profit-taking quickly morphed into something more concerning, as liquidity dried up and selling pressure intensified. The question now is whether this represents a healthy correction or something more troubling.

​The shift in risk appetite extended beyond equities, with investors rotating into safer assets. Gilt yields edged lower as demand for government bonds increased, while the dollar strengthened against most major currencies. This classic risk-off pattern suggests investors are taking a more cautious approach heading into the final weeks of the year.

​FTSE 100 holds up better than peers

​While global markets struggled, the FTSE 100 demonstrated its defensive qualities. The index dropped, certainly, but its more traditional composition helped cushion the blow. Banks and energy stocks weighed on performance, yet the presence of consumer staples, healthcare and utilities prevented a more dramatic decline.

​Continental European bourses fared worse, highlighting the UK market's lower exposure to high-growth technology names. This relative outperformance won't excite growth-focused investors, but it does illustrate the value of diversification during market turbulence. The FTSE's steady dividend payers suddenly look more attractive when growth stocks are selling off.

​The index's performance also reflects sterling's recent weakness, which benefits the large number of internationally-focused companies listed in London. When overseas earnings translate back into pounds, weaker sterling provides a natural tailwind. This currency effect has become increasingly important for FTSE 100 returns in recent years.

​Looking ahead, the question is whether this defensive stance can be maintained. If global growth concerns intensify, even the FTSE's more traditional constituents could come under pressure. For now, though, the index is demonstrating that boring can be beautiful when markets turn choppy.

​Weak UK economic data compounds concerns

​UK retail sales delivered another disappointment in October, falling more sharply than economists expected. Shoppers delayed purchases ahead of Black Friday promotions, but the underlying weakness suggests consumer confidence remains fragile. This adds to mounting evidence that the UK economy is losing momentum heading into the final quarter.

​Public sector borrowing figures provided little comfort. While the October deficit narrowed to £17.4 billion, it still missed forecasts. More worryingly, the numbers reinforce concerns about the government's limited fiscal headroom. With spending pressures mounting across multiple departments, the path to meeting fiscal targets looks increasingly challenging.

​These weak data points are already influencing market expectations for Bank of England (BoE) policy. Investors are pricing in an increased probability of a December rate cut, with gilt yields reflecting this shift in sentiment. The central bank faces a delicate balancing act between supporting growth and ensuring inflation remains under control.

​The combination of weak consumption and stretched public finances paints a challenging picture for the UK economy. While recession fears may be overblown, the data certainly doesn't support expectations of robust growth. This backdrop makes the defensive characteristics of many FTSE-listed companies more appealing to investors seeking stability.

​Oil and commodities slide on geopolitical shifts

​Oil markets extended their weekly decline, with Brent crude oil slipping below $63.00 per barrel. Rising hopes for peace in Ukraine, combined with US sanctions targeting Russian producers, created an unusual dynamic. The sanctions might normally support prices, but the prospect of reduced geopolitical tensions proved more powerful for market sentiment.

​UK energy shares felt the full force of the oil price weakness. Shell, BP and the broader energy sector dragged on the FTSE 100, highlighting the index's continued exposure to commodity price fluctuations. After a strong run earlier in the year, energy stocks are now giving back gains as the supply outlook becomes less supportive.

​The cryptocurrency market suffered its own reversal, with bitcoin sliding to around $84,000.00. The digital asset is heading for its weakest month since 2022, as momentum unwinds and liquidity thins across crypto markets. What looked like the start of a fresh bull run now appears more uncertain.

​These moves across different asset classes suggest a broader reassessment of risk. Whether commodities, equities or cryptocurrencies, markets that had enjoyed strong runs are now facing profit-taking. The synchronised nature of these declines indicates that portfolio repositioning, rather than asset-specific factors, is driving price action.

​Corporate updates paint mixed picture

​Individual company results provided scattered highlights amid the broader market gloom. Babcock shares weakened despite delivering solid results, a reminder that in a risk-off environment, even good news struggles to gain traction. The defence contractor has performed strongly year-to-date, but recent momentum has stalled.

​ASOS offered a more constructive outlook, despite reporting falling revenue. The online fashion retailer pointed to improving customer metrics and expects gross merchandise value to strengthen in 2026 as its turnaround strategy takes hold. Whether investors have the patience to wait for this recovery remains to be seen.

​Hammerson, Craneware and PPHE also featured in the week's corporate updates, though none managed to buck the negative sentiment weighing on broader markets. In current conditions, company-specific stories are struggling to compete with macro concerns about growth, interest rates and market valuations.

​The contrast between fundamental performance and share price reactions illustrates the challenge facing stock pickers. When market sentiment turns negative, even companies delivering on expectations can see their shares marked down. This environment favours index-level positioning over individual stock selection until confidence returns.