On Tuesday, Britain’s FTSE 100 experienced a decline, primarily driven by the financial sector. Barclays, in particular, faced a setback as Qatar Holdings reduced its stake in the bank, resulting in a 2.4% drop.
This move marked a significant reduction in Qatar Holdings’ investment, which had originated from the global financial crisis era.
Simultaneously, Moody’s, the credit rating agency, downgraded China’s government credit ratings from “stable” to “negative.”
This downgrade was attributed to concerns about lower medium-term economic growth and the ongoing downsizing of the Chinese property sector.
Consequently, banks with exposure to China, such as HSBC and Standard Chartered, experienced declines of 0.9% and 0.4%, respectively. Insurer Prudential also faced a 2.0% loss in its share value.
Daniela Sabin Hathorn, a senior market analyst at Capital.com, emphasized the significant impact of the Moody’s downgrade on the market’s performance on Tuesday.
She also highlighted a shift from the recent trend of a ‘buy everything’ rally, suggesting that the market’s resilience was being put to the test.
In terms of economic data, a survey indicated that the British services sector grew in November after experiencing three consecutive months of decline.
Investors were closely monitoring U.S. employment data scheduled for release during the week, including the October JOLTS number, the November ADP National Employment report, and the nonfarm payrolls report for November.
Additionally, the London Stock Exchange reported a brief outage in its trading and information system, affecting small-cap stock trades.
This incident marked the second such disruption in less than two months. However, it had no impact on the FTSE 100, FTSE 250, and International Order Book securities, which continued to trade normally.
In the UK, financial markets adjusted their expectations, increasing bets on an earlier start to interest rate cuts by the Bank of England.
This shift followed a statement from a European Central Bank policymaker suggesting that further interest rate hikes were “rather unlikely” for the euro zone.