London stocks hit one-week lows as rate fears and leadership uncertainty grow

London's main stock indexes fell to more than one-week lows, with the FTSE 100 down 0.7% to its weakest level since June 12 and the FTSE 250 off 1.8% to its lowest since June 10. Investors were pulling back into a broader risk-off mood, with global rate fears and domestic political uncertainty feeding the selloff.

The immediate pressure came from interest-rate expectations. Traders priced in the possibility that the Federal Reserve could lift rates by a total of 50 basis points by the end of the year, and higher borrowing costs tend to compress equity valuations and weaken sentiment. CME FedWatch tracks implied policy probabilities from 30-Day Fed Funds futures, and that pricing was driving stock moves across markets. Weakness in U.S. tech shares and Europe-wide caution added to the tone, with investors also uneasy that the artificial intelligence-led rally could run out of steam if rates stay elevated.

Britain's own political picture sharpened the move lower. Keir Starmer said on June 22 that he was quitting, opening the way for an orderly transfer of power to Andy Burnham. The resignation followed heavy local-election losses and weak poll ratings, leaving investors to think about possible changes to fiscal policy, economic priorities and the cost of capital at a time when the economy is already sensitive to financing conditions.

Corporate headlines underscored that dealmaking has not stopped even as shares slide. EasyJet and its investors were seeking at least £600 million more from Castlelake than had previously been discussed, after Castlelake disclosed a £4.74 billion takeover plan for the airline on June 22. EasyJet rejected the proposal as opportunistic and not in shareholders' best interests. In Germany, authorities formally rejected UniCredit's offer for Commerzbank shares on June 16, citing price and concerns over the Italian lender's approach. Heineken named Rafael Oliveira as its next chief executive on June 23, making him the first outsider to lead the brewer after Dolf van den Brink resigned in January 2026.

The FTSE 100's record high of 10,934.90 on Feb. 27 now looked distant.