FTSE 100 Tumbles as Risk-Off Sentiment Grips Markets, Legal & General Moves Spark Volatility

The FTSE 100 index fell 2.3% to close at 8,164.7 points, marking its steepest one-day decline in over a month. The sell-off was driven by a broad-based 'risk-off' shift, as investors retreated from equities into safer assets amid rising concerns over inflation persistence and central bank policy. Market participants cited a lack of clarity on future rate cuts as a key catalyst for the downturn. Legal & General (LGEN.L) emerged as a focal point after the insurer announced an unexpected strategic review of its UK property portfolio, signaling a potential divestment of assets valued at £2.1 billion. The move, not anticipated by analysts, triggered a 4.7% drop in the stock and sent ripples through the UK financial sector. Financials, which make up 27% of the FTSE 100, were the weakest-performing sector, dropping 3.1% on the day. The broader market reaction underscored growing sensitivity to corporate disclosures that hint at asset repositioning or capital constraints. Other major UK insurers, including Aviva and Prudential, saw their shares decline by 2.5% and 2.9% respectively, reflecting sector-wide repricing. The move also impacted the pound, which weakened to $1.2480 against the dollar, its lowest level in six weeks. Investors are now reassessing exposure to UK equities, especially in the financial and real estate sectors. The FTSE 100’s drop follows a recent rally fueled by optimism around inflation cooling, with the index having gained 5.8% in the prior month. The reversal highlights how quickly sentiment can shift under macroeconomic pressure.