Budget chaos and global AI uncertainty slash £27billion from FTSE 100 value

The FTSE100 suffered a £27 billion loss yesterday as markets were hit by anxiety and uncertainty regarding theBudget and a wobble in artific...

The FTSE100 suffered a £27 billion loss yesterday as markets were hit by anxiety and uncertainty regarding theBudget and a wobble in artificial intelligence stocks.

LondonThe blue-chip share index ended down 1.1%, or 109 points, at 9698 points.

The FTSE was affected by a worldwide selling spree that started on Wall Street a day prior as New York stock markets declined.

And the confusion resulting from Labour's change in income tax policy contributed to the chaos.

Top-tier financial institutions were particularly affected, with NatWest dropping almost 4 percent andBarclaysover 3 percent

Banks are among companies concerned that they could become the focus of a tax crackdown in the Chancellor's Budget – despite earlier reports, before the most recent reversal, indicating they would be exempt.

Rachel Reeves is reportedly looking towards the gambling industry – a move that could seem even more appealing following the decision to abandon an income tax increase.

The parent company of Ladbrokes, Entain, dropped almost 4 percent, while the owner of William Hill, Evoke, fell by 5 percent.

Dan Coatsworth, head of markets at AJ Bell, stated: 'The pessimism on Wall Street has spread to European and Asian markets like a contagious illness.'

All markets are experiencing declines as investors worry about weaknesses in the story that has fueled the biggest tech surge in recent years.

Investors are concerned about high stock valuations and the massive amounts of money being invested in AI at a moment when the job market appears unstable.

UK investors face their own challenges, let alone considering if there's a possible AI bubble set to burst.

Rumors suggest that Chancellor Rachel Reeves has abandoned portions of her Budget strategy just days ahead of the major announcement, causing concern in the bond market.

In other areas, the broader global sell-off put pressure on Bitcoin, causing it to drop below $100,000 on Thursday and then fall further to under $95,000 yesterday, its lowest level since May.

The early decline in the US was attributed to fears regarding American interest rates along with anxieties about an AI 'bubble' in technology stock prices.

It experienced significant declines during the night in Asian markets, with Japan's Nikkei and Hong Kong's Hang Seng both falling by almost 2 percent.

UK and European stocks later also participated in the selling, but London's decline was the most significant – with the FTSE falling by 2pc or almost 200 points at one point.

It eventually pushed back, but yesterday's drop remained the largest single-day decline since April — a time when markets were anxious about Donald Trump's tariff proposals.

The decline caused a loss of £27 billion in the total value of the UK's 100 largest publicly traded companies within one day.

US stocks started with a significant decline yesterday, but managed to recover some of their losses later.

It follows that critics have started to challenge the positive outlook on AI firms, which have contributed to Wall Street reaching multiple record peaks.

The semiconductor company Nvidia, considered the most valuable in the world, reached a valuation exceeding $5 trillion (£3.8 trillion) at its peak. Its stock dropped by 4 percent on Thursday but increased again the following day.

Experts worry that the rapid rise of artificial intelligence might lead to a speculative bubble, resulting in harmful effects if it collapses.

Last month, the Bank of England cautioned that asset prices "seem high" and likened the situation to the previous frenzy around "dotcom" stocks that collapsed 25 years ago.

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