The FTSE 100 opened lower on Thursday, continuing its downward trend from yesterday as selling pressure built across banks, housebuilders, and property stocks. The index fell by 101.3 points or 1.03% to 9706.65, reflecting caution among investors amid shifting tax expectations and global market weakness.

Banks and Housebuilders Lead Declines

UK banking majors faced declines, with Lloyds and NatWest each dropping close to 3%, as concerns grew over the government’s potential income tax U-turn and its implications for monetary policy. 

Housebuilders were under equal pressure. Persimmon slipped by more than 3.96% to £1,223.50, while Berkeley Group extended its decline by falling 3.68% to £3,818, as shown in the market data. 

Land Securities shed nearly 4%, even after the company raised its full-year outlook on the back of stronger rental income trends. The pessimistic market backdrop overshadowed the company’s operational improvements.

Corporate Movers: Winners and Losers

Despite the broader market weakness, a few stocks managed to post gains. Burberry advanced by 1.38% to £1,245, supported by renewed buying interest in retail exporters. 

Diageo gained 0.25% to £1,822.50, Shell rose 0.16% to £2,864, DCC rose 0.12% to £4,944, Coca-Cola gained 0.11% to £3,3362, and BP also edged slightly higher, with each stock showing modest gains in the morning session. 

However, several stocks dragged the index lower. NEXT declined by 1.72% to £14,025, reflecting pressure across retail-linked stocks. 

Endeavour Mining fell 3.18% to £3,294, Diploma dropped 1.60% to £5,240, and London Stock Exchange Group slipped 0.96% to £8,702, while Antofagasta retreated 2.86% to £2,715 due to softer demand trends in industrial metals.

Markets React to US Selloff and Rate-Cut Uncertainty

Thursday’s declines were amplified by the previous night’s selloff on Wall Street. The Dow Jones and S&P 500 both fell 1.7%, and the Nasdaq slid 2.3%, triggered by hawkish commentary from Federal Reserve officials. 

Nvidia’s 4% drop and Tesla’s 7% decline intensified concerns that the recent AI-driven rally may be overextended.

In Asia, Japan’s Nikkei 225 dropped 1.8% and Hong Kong’s Hang Seng fell 1.6%, signaling broad global risk aversion.

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Income Tax U-Turn Adds UK-Specific Pressure

Some reports said that Chancellor Rachel Reeves may abandon plans for an income tax rise, opting instead for adjustments to tax thresholds. 

This shook the bond markets, pushing the UK 10-year gilt yield up to 4.54%. This also marked the end of the positive sentiment that had been building on early rate cut expectations.

Experts warned that unclear fiscal direction may complicate upcoming Bank of England decisions, especially if tax policies were to be changed in a manner that would reduce economic activity.