By Shubham Batra, Khushi Singh and Pranav Kashyap
(Reuters) -London stocks dropped nearly 2% on Tuesday with its broadest selloff in years on growing geopolitical tensions in the Middle East and reduced expectations of U.S. interest rate cuts, while a slide in Dr Martens (LON:DOCS) exacerbated losses.
Britain's main indexes FTSE 100 and FTSE 250 witnessed a freefall and tumbled 1.8% each.
The FTSE 100 logged its biggest intraday percentage drop in eight months, with nearly all stocks on the index ending in the red, while for the FTSE 250 the drop was the worst in three months.
Bootmaker Dr Martens slumped 29.4% to a record low after it named a new CEO and flagged a challenging fiscal 2025 on weak U.S. demand. The news pushed the personal goods sector to a 14-year low, falling 5.7%.
Superdry tumbled 23.8% after it launched a turnaround plan that included an equity raise that would take the fashion chain private.
Among other sectors, industrial metal miners followed with a 3.1% fall after prices of non-ferrous metals dropped on a stronger U.S. dollar. [MET/L]
Equities have been under heavy selling pressure as recent economic data in the U.S. have pushed back rate-cut expectations, with money markets expecting the Bank of England to cut rates by 41 basis points in 2024. [0#BOEWATCH]
"Currently there is one rate cut fully priced in and a high chance of a second cut. We think that the prospect of a second cut is now less likely," said Kathleen Brooks, research director at XTB.
Meanwhile, unemployment in the UK edged higher in February and core wages saw their weakest climb since mid-2022, bolstering bets for Bank of England rate cuts in the near future.
British recruiters Hays (LON:HAYS) and Robert Walters dropped 4.3% and 4.9%, respectively, following a drop in their quarterly net fees, weighed down by low client and candidate confidence in major markets amid sluggish hiring conditions.