Markets Stumble as Moody's Downgrades U.S. Credit Rating

London equities suffered a notable decline following Moody's downgrade of the U.S. credit rating. The FTSE 100 and FTSE 250 recorded losses as global market pressures mounted. President Trump's tax-cut bill advanced in Congress, sparking concerns over national debt. Britain and the EU reset trade relations post-Brexit.

London equities took a hit on Monday as global markets reacted to Moody's downgrade of the U.S. sovereign credit rating. Investors remained alert with the UK-European Union summit in focus. At 1013 GMT, the FTSE 100 had descended 0.8%.

The FTSE 250 midcap index dropped 1.3%, poised to break its seven-session winning streak. Markets globally were tense as U.S. Treasury yields climbed post-Moody's downgrade, triggered by concerns over America's burgeoning $36 trillion debt.

In a key move, President Trump's tax-cut bill, previously stalled by Republican debates over spending, got congressional committee approval on Sunday. Analysts predict the bill could swell U.S. debt by up to $5 trillion in ten years. Despite being somewhat symbolic, the U.S. downgrade and tax reform news dampened market sentiment, according to AJ Bell's Russ Mould.

UK's 30-year gilt yield peaked since April at 5.494%, affecting rate-sensitive stocks like real estate, which fell 1.4%. In a landmark agreement, Britain adjusted its EU ties, alleviating trade barriers and enhancing cooperation on defense, crucial after Trump's disruption of the global order.

(With inputs from agencies.)