Banking stocks have fallen sharply to leave the FTSE 100 index down by more than 1%.
The selling has been fuelled by credit quality issues at two regional US lenders, as well as ongoing China trade tensions.
The safe haven asset of gold set another record, trading above $4360 an ounce for the first time.
Read more on the record gold price
FTSE 100 Live Friday
- Banking shares fall
- Gold sets new record
- Pearson sales rally
Market update: Banks lead FTSE 100 reverse, BP down as Brent nears $60
10:13 , Graeme EvansA global market sell-off due to US credit quality fears today left Barclays shares down by 6% and the FTSE 100 index 1.5% lower.
The flight from risk and a spike in the Vix index of volatility to its highest level since April followed yesterday’s disclosure of loan issues at two regional US banks.
Despite hopes these are isolated incidents, the problems fuelled broader questions about US credit quality after a lengthy period of elevated rates and expansion in private credit.
Barclays, which has significant exposure to the US banking sector, fell 22.1p to 357.15p near the bottom of the FTSE 100. Standard Chartered also weakened 67.5p to 1360.5p and NatWest dropped 18p to 530.2p.
AJ Bell investment director Russ Mould said: “The pullback in UK-listed banks will be sentiment-driven. Investors have been spooked and moved to trim positions in the sector, possibly opting to have lower exposure in case a crisis is brewing.
“There is no evidence of any issues with the London-listed core banking names, but investors often have a knee-jerk reaction when problems appear anywhere in the sector.
Asset manager ICG, which used to be called Intermediate Capital Group, topped the fallers board with a reverse of 7% or 141p to 1901p.
US tech investor Scottish Mortgage Investment Trust fell 3% or 37p to 1088p and Polar Capital Technology Trust dipped 13.5p to 422.5p.
The FTSE 100 index fell by 138.88 points to 9297.21, with US futures pointing to a 1% decline for the S&P 500 index at Wall Street’s opening bell.
The Nikkei 225 earlier fell 1.4% and the Hang Seng index lost 2.5%.
Among other fallers in London, BP shares dropped 3% or 12.2p to 400.85p after the price of Brent Crude fell by another 1% to $60.39 a barrel.
In contrast, the price of gold set another record high above $4370 an ounce before later settling at $4338 an ounce.
Two stocks weathered the storm in the FTSE 100 as coursework publisher Pearson lifted 40.5p to 1134.5p and Smiths Group added 66p to 2432p.
Pearson rose after it said underlying sales growth accelerated to 4% in the third quarter, boosted by demand for virtual learning courses.
Smiths benefited from the sale of its Interconnect division to a US buyer for an enterprise value of £1.3 billion, above City expectations of £981 million.
US loan issues spark risk averse session, FTSE 100 down 1.5%
09:43 , Graeme EvansCredit issues at regional US lenders Zions Bancorp and Western Alliance Bancorp have fuelled today’s risk averse session for global markets.
Their shares last night fell 13% and 11% respectively as Zions Bancorp announced it was taking a $50 billion (£37 billion) charge on the discovery of two bad loans and Western Alliance said it was handling a potentially fraudulent borrower.
UBS Global Wealth Management said: “We believe these credit issues are idiosyncratic and not indicative of a broader weakening of credit trends.
“In fact, recent industry delinquency data continues to show credit stability and even modest sequential improvement.”
The weaker global sentiment meant the Nikkei 225 closed 1.5% lower and the Hang Seng index fell by 2.5%.
The FTSE 100 index is off by 1.5%, with US-focused lender Barclays down by 6% and asset manager ICG 7% lower.
Gold price continues record advance
08:59 , Graeme EvansThe gold price rally continued earlier today after the precious metal surged by 1.5% to set a fresh record above $4370 an ounce. It later settled at $4341, leaving it on course for the strongest week in over five years.
The safe haven commodity has risen by more than 50% in less than a year, fuelled by geopolitics, higher government debt and inflation uncertainty.
The outlook for US lower interest rates has also boosted the appeal of the non-yielding asset.
Pearson boosted by virtual learning demand, shares rally
08:50 , Graeme EvansPearson shares today rose 3% at the top of a weak FTSE 100 index after it said underlying sales growth accelerated to 4% in the third quarter.
The coursework publisher reported 2% growth for the first nine months of the year.
The improvement was partly driven by a 17% surge in its virtual learning division, with enrolments up by 13% for the 2025-26 academic year.
Pearson runs full-time online schools for students in the US, as well as virtual courses and part-time online learning.
Shares lifted 33p to 1127p as chief executive Omar Abbosh said the company is on track to meet City expectations for the year.
He added: “Pearson delivered another quarter of good progress, with accelerated sales growth in the third quarter, and robust performance across our businesses.”
Wall Street futures lower, Vix highest since April
08:29 , Graeme EvansUS futures trading points to a 1% decline for the S&P 500 index at today’s opening bell, while the Vix index of volatility has returned its highest level since April.
Richard Hunter, head of markets at Interactive Investor, said there appeared to be increasing signs of storm clouds gathering over markets, “with little relief from the building wall of worry”.
He said: “Already grappling with stretched stock valuations in the AI space, an unresolved government shutdown and a deteriorating relationship between Beijing and Washington, investors were exposed to a new source of concern in the form of lending practices and bad loans for US regional banks.
“Of themselves, the credit losses announced by two regional banks were limited and seem to be contained.
“While there are hopes that this could be an isolated incident, the episode brought back unwelcome memories of the Silicon Valley Bank collapse in 2023 and, with several regional banks yet to report, investors are on high alert.”
FTSE 100 down 1.4%, banking stocks under pressure
08:07 , Graeme EvansThe FTSE 100 index is down 1.4% or 131.74 points to 9304.35, with Barclays among the biggest fallers after a decline of 5% or 19.9p to 359.4p.
NatWest dropped 3% or 18p to 530.2p and Lloyds fell 2.2p to 82.3p as the lenders tracked overnight weakness in the US banking sector.
The S&P 500 banking sector fell 3% yesterday, the worst performance since April amid concerns over credit quality issues at two regional US lenders.
In London, global alternative asset manager ICG fell 5% or 103p to 1939p and Standard Chartered reversed 61.5p to 1366.5p.
On a shortened risers board, coursework publisher Pearson lifted 4% or 38.5p to 1132.5p after posting an in-line third quarter update.
Smiths added 24p to 2390p, boosted by last night’s £1.3 billion deal to sell its Interconnect unit.
Firms to pay £10.2m minimum wage fines
07:59 , Graeme EvansBritish Gas owner Centrica, EG Group and Holland & Barrett are among the latest firms to be named by the Government for failing to pay some of their staff the minimum wage.
The Department for Business and Trade (DBT) released a list of 491 employers that underpaid workers over several years.
They will pay fines amounting to a combined £10.2 million as a result of breaking the rules.
It means pay for some staff fell short of the national minimum wage, or the national living wage, which is what the Government calls the minimum wage for those aged over 21.
Smiths agrees sale of Interconnect unit
07:40 , Graeme EvansFTSE 100 industrial conglomerate Smiths Group last night took a major step in its strategic overhaul by agreeing the sale of its Interconnect business to a US buyer.
The operation, which supplies electronic components for use in satellites and a range of other industries, was given an enterprise value of £1.3 billion in the deal with Molex Electronic Technologies.
The disposal forms part of break-up plans that will also include the separation of the airport scanners business Smiths Detection.
Smiths said it intends to return a large portion of the disposal proceeds from the sale of the Interconnect business to shareholders.
Chief executive Roland Carter said: “This is an important step as we deliver on our commitment to focus Smiths and unlock the inherent value in our business.”
FTSE 100 seen 1% lower, gold price run continues
07:01 , Graeme EvansThe FTSE 100 index is set for a fall of 1% as London traders track yesterday’s weak performance by US markets and selling in Asia.
The Dow Jones Industrial Average fell 0.7%, the S&P 500 index lost 0.6% and the Nasdaq Composite retreated 0.5%, declines fuelled by jitters over the bad loans exposure of two regional banks.
China trade tensions and the US government shutdown were among factors in the sell-off. US futures trading currently shows the S&P 500 about 0.5% lower when Wall Street reopens later today.
In Asia, the Nikkei 225 is down by 1.5% while the Hang Seng index is off 1.8%.
The FTSE 100 index closed up 0.1% at 9436.09 in yesterday’s session.
The price of gold is at a fresh record high above $4365 an ounce after safe haven demand drove the precious metal 1% higher in Asia dealings.
