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The FTSE 100 opened lower on Thursday after markets in the US and Asia tumbled overnight.
Share prices declined sharply on Wall Street as investors sold off fast-growing technology companies in favour of firms set to profit from the economic recovery.
The sell-off was driven in part by fears that Joe Biden’s $1.9 trillion stimulus package and a wider recovery will stoke higher inflation and that the US central bank will raise interest rates to increase the cost of borrowing and cool the economy.
US government bond yields have risen sharply this week, a trend that is seen to indicate that the cost of borrowing is likely to rise globally.
In London the FTSE 100 fell 1 per cent to 6,605.47 while the more UK-focused FTSE 250 dropped 0.4 per cent.
IT group Sage was among the strongest gainers after it announced it will buy back up to £300m of its own shares between now and early September at the latest.
In Asian trading, Japan’s Nikkei 225 lost 2.1 per cent to 28,930.11 and the Hang Seng in Hong Kong dropped 2.2 per cent to 29,236.79.
Australia’s S&P/ASX 200 lost 0.8 per cent to 6,760.70.The Shanghai Composite index fell 2.1 per cent to 3,503.49.
It came as Deliveroo announced on Thursday that it had chosen the London Stock Exchange as the place to list its shares for the first time.
The food delivery app said its choice underscored its commitment to the UK.
Deliveroo, which has enjoyed surging sales during the pandemic as people have been confined to their homes, was founded in London in 2013.
Rishi Sunak hailed the decision as vindication of his move to relax stock market listing rules.
He said the reforms being looked at would “encourage even more high growth, dynamic businesses to list in the UK”.
Mr Sunak added: “Deliveroo has created thousands of jobs and is a true British tech success story.
“It is great news that the next stage of their growth will be on the public markets in the UK.”
The chancellor’s Budget announcement on Wednesday resulted in a bumper day house builders’ share prices.
Mr Sunak confirmed that the government would extend a stamp duty holiday for people buying homes and reintroduce government-backed mortgages for people with only a 5 per cent deposit.
Developers have benefited from previous rounds of government subsidy for the UK’s booming housing market.
Barratt and Persimmon ended the day 7 per cent higher, making them the strongest gainers on the FTSE 100 while Redrow, Taylor Wimpey, Countrywide, Bellway and Crest Nicholson all rose.
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