By Twesha Dikshit and Ragini Mathur
(Reuters) – London equities fell sharply on Monday, tracking the weakness in global markets after Moody’s downgrade of U.S. sovereign credit rating, while investors also focused on the UK-European Union summit.
As of 1013 GMT, the blue-chip FTSE 100 was down 0.8%.
Meanwhile, the midcap FTSE 250 index slipped 1.3% and was on track to snap its seven-session winning streak, if losses hold.
Global markets were under pressure on Monday with longer-dated U.S. Treasury yields rising after Moody’s cut the country’s sovereign credit rating on Friday due to concerns about the nation’s growing $36 trillion debt pile.
U.S. President Donald Trump’s sweeping tax-cut bill, which had been stalled for days by Republican infighting over spending cuts, won approval from a key congressional committee on Sunday. Nonpartisan analysts say the bill would add $3 trillion to $5 trillion to the nation’s debt over the next decade.
“While largely a symbolic move, the U.S. credit downgrade from Moody’s, as well as the progress of a bill in Washington promising major tax cuts, cast a pall over the markets at the start of the week,” said AJ Bell investment director Russ Mould in an email.
UK’s 30-year gilt yield also rose to the highest since April 11 at 5.494%.
The rate-sensitive real estate sub-index dropped 1.4%.
In other major developments, Britain agreed to the most significant reset of ties with the EU since Brexit, removing some trade barriers and collaborating on defence to help grow its economy and boost security on the continent.
The reset follows Trump’s upending of the post-war global order, which has forced governments around the world to rethink ties on trade, defence and security.
Luxury stocks declined after China’s retail sales data for April missed expectations. Burberry Group and Watches Switzerland down 2% each.
(Reporting by Twesha Dikshit and Ragini Mathur in Bengaluru; Editing by Leroy Leo)
