UK Stocks Fall, Bond Yields Reach 27-Year High Amid Fiscal Concerns

UK stock markets declined significantly on Tuesday, with the FTSE 100 dropping 0.9% and the midcap index falling 2.2%, marking their worst day in nearly five months amid mounting investor concerns about public finances. The 30-year UK gilt yields surged to 5.72%, their highest since 1998, reflecting anxiety over the government's fiscal management and the possibility of further tax increases ahead of an expected budget. Bank stocks, including NatWest, Barclays, and Lloyds, were notably affected by proposals for new taxes on lenders, while sectors such as real estate, utilities, insurers, retailers, and travel also suffered losses. The UK pound weakened sharply against the US dollar, declining more than 1.5%, driven by increased bond market volatility and concerns about global trade tensions following a US court ruling that challenged President Donald Trump's tariffs. European markets also faced pressure, with Germany's DAX leading declines as investors reacted to the US court decision that deemed Trump's global tariffs illegal, intensifying uncertainty in an already fragile market environment. Investors remain cautious ahead of key inflation data releases and further economic policy announcements, with concerns about trade policy and fiscal stability weighing heavily on market sentiment.