London Daily

Focus on the big picture.
Saturday, Nov 29, 2025

Markets react to PM's political crisis and oil falls 10% as investors fret over global recession

Markets react to PM's political crisis and oil falls 10% as investors fret over global recession

A report by the Bank of England did nothing to soothe investor concern that Western economies are facing the real prospect of going into reverse as the year progresses.

Global financial markets are enduring a day of turmoil over rising fears of a recession for the US and Europe, while a slump in the value of the pound has accelerated amid the crisis engulfing Boris Johnson's government.

There was a rush for safe havens in Europe on Tuesday, later mirrored in the US, with stock markets plunging and the pound and euro coming under intense pressure from the dollar - a traditional place of shelter in volatile times.

Sterling hit its lowest level against the greenback since the start of the pandemic at $1.18.9 - a plunge of almost two cents on the day - while the single currency slumped to a 20-year low versus the dollar.


The pound's value barely moved when it emerged that Sajid Javid and Rishi Sunak had quit their government roles, leaving the UK without a health secretary or chancellor and the PM clinging precariously to power.

Traders reported that while a strong dollar was evident in the currency market, there were particular concerns in Europe over mounting gas prices.

However Norway, the second-largest supplier on the continent after sanctions-hit Russia, later alleviated fears around tightness of supply after a union claimed the country's government had used its power to impose a settlement and end a strike that had threatened crucial exports.

The Bank of England also added to the general gloom when its latest Financial Stability Report warned that the economic outlook for the UK and the wider world had darkened because of the backdrop of surging inflation - much of it energy linked.

It told UK banks to ramp up capital buffers - a requirement for cash to be held in reserve - to help them withstand the slowdown ahead.

The growing fears of an inflation-led slump did help Brent crude oil, which reached 14-year highs in the wake of Russia's invasion of Ukraine, fall by more than 10% on the day to $101 a barrel in anticipation of falling demand.


A sustained period around that level could help bring down the cost of fuel at the petrol pumps but there are many other factors at play for forecourt costs despite accusations from motoring groups that retailers had already been slow to pass on falling wholesale costs.

Stock markets were widely down by more than 2% across Europe.

The FTSE 100 in London closed the day 2.9% lower at 7,025 points, with mining and energy stocks enduring the worst of the pain.

It meant that £54bn was erased from the market value of the index.

Chris Beauchamp, chief market analyst at online trading platform IG, said there was evidence of a 4th July bank holiday hangover.

"The return of US traders from their holiday has dealt the death blow to hopes of a European market rally that lasts longer than about 24 hours.

"This recurrence of selling has put indices across the board into the red, as growth and inflation fears return right on cue.

"Normally July provides some welcome relief to markets after a choppy June, but so far the instinct to sell any bounce, no matter how small, remains all-encompassing," he wrote.

Newsletter

Related Articles

0:00
0:00
Close
250 Still Missing in the Massive Fire, 94 Killed. One Day After the Disaster: Survivor Rescued on the 16th Floor
Trump: National Guard Soldier Who Was Shot in Washington Has Died; Second Soldier Fighting for His Life
UK Chancellor Reeves Defends Tax Rises as Essential to Reduce Child Poverty and Stabilise Public Finances
No Evidence Found for Claim That UK Schools Are Shifting to Teaching American English
European Powers Urge Israel to Halt West Bank Settler Violence Amid Surge in Attacks
"I Would Have Given Her a Kidney": She Lent Bezos’s Ex-Wife $1,000 — and Received Millions in Return
European States Approve First-ever Military-Grade Surveillance Network via ESA
UK to Slash Key Pension Tax Perk, Targeting High Earners Under New Budget
UK Government Announces £150 Annual Cut to Household Energy Bills Through Levy Reforms
UK Court Hears Challenge to Ban on Palestine Action as Critics Decry Heavy-Handed Measures
Investors Rush Into UK Gilts and Sterling After Budget Eases Fiscal Concerns
UK to Raise Online Betting Taxes by £1.1 Billion Under New Budget — Firms Warn of Fallout
Lamine Yamal? The ‘Heir to Messi’ Lost to Barcelona — and the Kingdom Is in a Frenzy
Warner Music Group Drops Suit Against Suno, Launches Licensed AI-Music Deal
HP to Cut up to 6,000 Jobs Globally as It Ramps Up AI Integration
MediaWorld Sold iPad Air for €15 — Then Asked Customers to Return Them or Pay More
UK Prime Minister Sir Keir Starmer Promises ‘Full-Time’ Education for All Children as School Attendance Slips
UK Extends Sugar Tax to Sweetened Milkshakes and Lattes in 2028 Health Push
UK Government Backs £49 Billion Plan for Heathrow Third Runway and Expansion
UK Gambling Firms Report £1bn Surge in Annual Profits as Pressure Mounts for Higher Betting Taxes
UK Shares Advance Ahead of Budget as Financials and Consumer Staples Lead Gains
Domino’s UK CEO Andrew Rennie Steps Down Amid Strategic Reset
UK Economy Stalls as Reeves Faces First Budget Test
UK Economy’s Weak Start Adds Pressure on Prime Minister Starmer
UK Government Acknowledges Billionaire Exodus Amid Tax Rise Concerns
UK Budget 2025: Markets Brace as Chancellor Faces Fiscal Tightrope
UK Unveils Strategic Plan to Secure Critical Mineral Supply Chains
UK Taskforce Calls for Radical Reset of Nuclear Regulation to Cut Costs and Accelerate Build
UK Government Launches Consultation on Major Overhaul of Settlement Rules
Google Struggles to Meet AI Demand as Infrastructure, Energy and Supply-Chain Gaps Deepen
Car Parts Leader Warns Europe Faces Heavy Job Losses in ‘Darwinian’ Auto Shake-Out
Arsenal Move Six Points Clear After Eze’s Historic Hat-Trick in Derby Rout
Wealthy New Yorkers Weigh Second Homes as the ‘Mamdani Effect’ Ripples Through Luxury Markets
Families Accuse OpenAI of Enabling ‘AI-Driven Delusions’ After Multiple Suicides
UK Unveils Critical-Minerals Strategy to Break China Supply-Chain Grip
Taylor Swift’s “The Fate of Ophelia” Extends U.K. No. 1 Run to Five Weeks
UK VPN Sign-Ups Surge by Over 1,400 % as Age-Verification Law Takes Effect
Former MEP Nathan Gill Jailed for Over Ten Years After Taking Pro-Russia Bribes
Majority of UK Entrepreneurs Regard Government as ‘Anti-Business’, Survey Shows
UK’s Starmer and US President Trump Align as Geneva Talks Probe Ukraine Peace Plan
UK Prime Minister Signals Former Prince Andrew Should Testify to US Epstein Inquiry
Royal Navy Deploys HMS Severn to Shadow Russian Corvette and Tanker Off UK Coast
China’s Wedding Boom: Nightclubs, Mountains and a Demographic Reset
Fugees Founding Member Pras Michel Sentenced to 14 Years in High-Profile US Foreign Influence Case
WhatsApp’s Unexpected Rise Reshapes American Messaging Habits
United States: Judge Dressed Up as Elvis During Hearings – and Was Forced to Resign
Johnson Blasts ‘Incoherent’ Covid Inquiry Findings Amid Report’s Harsh Critique of His Government
Lord Rothermere Secures £500 Million Deal to Acquire Telegraph Titles
Maduro Tightens Security Measures as U.S. Strike Threat Intensifies
U.S. Envoys Deliver Ultimatum to Ukraine: Sign Peace Deal by Thursday or Risk Losing American Support
×