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The FTSE 250 fell almost four per cent this week, experiencing its worst week since August 2023 as fears mount over the stability of the UK economy.
With pound sterling sinking and UK gilt yields rising to decade-long highs, investors have begun to panic that the UK economy and government are coming under pressure.
“The global bond sell-off showed few signs of letting up over the last 24 hours, with long-term borrowing costs continuing to move higher across the board,” said Deutsche Bank research strategist Jim Reid.
As well as wider expectations of the UK economy sinking, disappointing results from retailers like B&M and Greggs also pushed the index down throughout the week.
The sausage-roll maker is down almost 25 per cent since the start of the week, after reporting a slowdown in sales thanks to “subdued high street footfall”.
Meanwhile, Hays fell more than 10 per cent after Morgan Stanley downgraded the stock to underweight, while vending machine operator ME Group fell 11 per cent.
The four per cent fall is the worst weekly performance for the FTSE 250 since the week of 13 August 2023, when fears over the Chinese economy and poor retail sales wracked the index.
Meanwhile, despite the shocking performance of the FTSE 250, the FTSE 100 is actually up 0.5 per cent over the last week.
“Approximately half of the [FTSE 250] generates earnings in the UK whereas about three quarters of the FTSE 100 earns overseas, making that index less of a play on the state of the UK,” explained Russ Mould, investment director at AJ Bell.
With the pound plummeting against major currencies, FTSE 100 firms that do business internationally may actually benefit from the economic turmoil at home.
In addition, the high concentration of miners in the FTSE 100 have been boosted from a global rebound in commodity prices throughout the week.
