London stocks slumped in early trade on Friday following heavy losses on Wall Street, as worries about AI valuations and US growth rattled markets yet again.
At 0835 GMT, the FTSE 100 was down 0.8% at 9,451.25.

Kathleen Brooks, research director at XTB, said: "The premise for stocks on Thursday was strong: Nvidia's results were stunning, and the US unemployment rate rose, sparking hope that the FOMC may consider a rate cut next month. However, there was a categorical reversal in sentiment, stocks plunged, intra-day volatility surged to its highest level since April, and Nvidia's share price shed 3%. Stocks are now on track to register their worst week since President Trump's tariff plan ripped through markets back in April.

"So, what are the drivers for the sell off? Unlike the April sell off, when President Trump's tariff threats caused chaos on global markets, there is no single driver of the November sell off. There are concerns that the US economy will slow, the Fed won't cut rates, and the market is still having an existential crisis about lofty valuations for AI stocks. A large fear is that the AI spending frenzy may not generate the returns needed to justify the investments, which is why tech stocks have been hammered this month.

"It was easier to recover from the tariff slump in stocks, since one man, President Trump, had to do one thing, reduce tariffs, for stocks to recover. This time it's different. There is no single thing that needs to change, the market instead has buyer's remorse over pushing tech stock valuations too high, and this will take time to work its way out of the system."

On home shores, a couple of uninspiring data releases did nothing to lift the mood.

Figures from the Office for National Statistics showed the government borrowed more than expected in October.

Borrowing came in at £17.4bn, down £1.8bn on October 2024 but above expectations of £15bn. It was also slightly higher than the Office for Budget Responsibility's forecast of £14.4bn and marked the third-highest October borrowing since monthly records began in 1993, after those of 2024 and 2020.

ONS chief economist Grant Fitzner said: "Borrowing this October was down on the same month last year, although it was still the third-highest October figure on record in cash terms.

"While spending on public services and benefits were both up on October last year, this was more than offset by increased receipts from taxes and National Insurance contributions."

Total borrowing in the year so far was £116.8bn, up £9bn on the same period a year earlier and the second-highest figure for April to October on record after that of 2020.

Separate data from the ONS showed that retail sales unexpectedly fell in October, as consumers held back on spending ahead of the Black Friday sales.

Sales slid 1.1%, reversing an upwardly-revised 0.7% uplift in September. Analysts had been looking for flat sales.

Grant Fitzner said: "In October, monthly sales fell back for the first time since May.

"Supermarkets, clothing stores and online retailers all saw slower sales, with feedback from some retailers that consumers were waiting for November's Black Friday deals."

In the three months to October, sales rose 1.1% compared to the previous quarter, supported by strong clothing sales in the summer and tech sales in September and October. Year-on-year, sales rose 0.2% in October, also below expectations, for a 1.5% jump.

In equity markets, reports of a potential peace plan to end the Ukraine war dented defence and energy names.

Rolls-Royce, Babcock and BAE Systems all fell. Babcock was also in focus after it delivered a big jump in profits over the first half ended 30 September, driven by double-digit organic growth in its nuclear division and an improvement in group margins.

The company, which provides engineering support to defence markets along with products like naval ship and weapons handling systems, said it remains on track to achieve its expectations for the full year.

Miners were also under the cosh, with Antofagasta, Glencore and Rio Tinto all down.

Tullow Oil tanked after saying it is engaging in refinancing talks in an attempt to put the business on a "long-term sustainable financial footing", as it revealed that full-year output would be at the low end of guidance and production would fall further next year.

On the upside, Hammerson gained as it completed the £104.5m purchase of the remaining 50% stake in The Oracle, located in Reading, and lifted its EPRA guidance.

Market Movers

FTSE 100 (UKX) 9,467.79 -0.63%
FTSE 250 (MCX) 21,247.15 -0.64%
techMARK (TASX) 5,482.19 -0.26%

FTSE 100 - Risers

Persimmon (PSN) 1,219.00p 1.46%
Rentokil Initial (RTO) 406.50p 1.45%
Severn Trent (SVT) 2,756.00p 1.40%
Diageo (DGE) 1,727.50p 1.38%
London Stock Exchange Group (LSEG) 8,434.00p 1.25%
Bunzl (BNZL) 2,116.00p 1.24%
Haleon (HLN) 374.10p 1.22%
Unilever (ULVR) 4,535.00p 1.18%
Barratt Redrow (BTRW) 369.20p 1.01%
Games Workshop Group (GAW) 18,440.00p 0.99%

FTSE 100 - Fallers

Antofagasta (ANTO) 2,553.00p -3.55%
Fresnillo (FRES) 2,266.00p -3.08%
Rolls-Royce Holdings (RR.) 1,046.00p -3.06%
Glencore (GLEN) 339.50p -2.74%
JD Sports Fashion (JD.) 75.22p -2.67%
Babcock International Group (BAB) 1,101.00p -2.57%
Scottish Mortgage Inv Trust (SMT) 1,034.50p -2.54%
Standard Chartered (STAN) 1,536.50p -2.44%
WPP (WPP) 292.20p -2.40%
Melrose Industries (MRO) 593.20p -2.27%

FTSE 250 - Risers

Frasers Group (FRAS) 713.00p 4.09%
Bakkavor Group (BAKK) 230.00p 2.91%
Trustpilot Group (TRST) 177.40p 2.72%
International Workplace Group (IWG) 220.00p 2.23%
Hammerson (HMSO) 294.80p 2.15%
Trainline (TRN) 258.00p 2.14%
Telecom Plus (TEP) 1,722.00p 2.14%
XPS Pensions Group (XPS) 320.00p 1.91%
B&M European Value Retail S.A. (DI) (BME) 167.60p 1.58%
Grainger (GRI) 183.20p 1.55%

FTSE 250 - Fallers

Ithaca Energy (ITH) 210.75p -9.74%
Diversified Energy Company (DEC) 1,070.00p -5.39%
IntegraFin Holding (IHP) 318.50p -5.07%
Hochschild Mining (HOC) 347.00p -4.93%
Polar Capital Technology Trust (PCT) 436.00p -4.60%
Mony Group (MONY) 181.10p -4.58%
THG (THG) 40.18p -4.56%
Allianz Technology Trust (ATT) 496.00p -4.25%
Harbour Energy (HBR) 221.20p -4.24%
Anglo-Eastern Plantations (AEP) 1,305.00p -4.04%