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FTSE 100 Live: Starmer unease rattles markets; Big tech sell-off

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Prime Minister Keir Starmer
Starmer urged to tighten Slapps laws following Mandelson scandal

Good morning and welcome back to the CityAM liveblog.

Speculation over Keir Starmer’s future has unleashed a fresh round of market unease as investors dumped the pound, UK equities and long-dated government bonds amid rising political uncertainty.

The gulf in price between the UK’s short- and long-term debt – known as the yield curve – reached its highest since 2018 on Thursday, in a sign investors were losing faith in the long-term credibility of the UK economy even as the interest rate outlook improved.

Interest rates on the 10-year gilt, the main benchmark for a government’s long term capacity to borrow, remained elevated, as investors priced in the prospect of a new leader with looser fiscal restraint.

“Long gilt yields remain tied to UK political risk,” David Zahn, head of European fixed income at Franklin Templeton, told CityAM. 

“While we had anticipated political risk later in the year, it seems to be coming forward in the calendar.”

Meanwhile, the market unease continued over on Wall Street where big tech stocks tumbled for a third consecutive day on Thursday as investors risk-off stance led to drastic losses across software giants.

Whilst the FTSE 100’s software specialists were able to claw back losses made in previous sessions, with Sage, the London Stock Exchange Group and Relx all ending the session in the green, losses persisted across the pond.

The latest round of jitters were triggered by Anthropic’s fresh AI tool debuting earlier this week and sending jitters across the software market.

As stocks continue to fall, are we coming closer to the end of the AI bubble?

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