The UK's bellwether FTSE 250 index suffered its worst days since the onset of the CV19 pandemic yesterday.
Fears of an economic slowdown - coupled with with worries that soaring interest rates will squeeze consumer spending power - saw the midcap index slump 530.57 points (3.1%) to 16,790.40.
This was its biggest daily fall since March 2020 and put it back to its levels of May 2020.
The FTSE 100 blue-chip index finished at its lowest value since July last year after shedding 123 points, ending the day at 6,881.59. It has now lost close to 10% of its value so far this year.
It started today up 19 points at 6,901.
Next feels the pain
Retailers and housebuilders were among the hardest hit yesterday, as analysts described the UK economic strategy as "a mess".
Shares in Next closed down 650p, or 12.2 %, to £46.74 on the London Stock Exchange, extending losses this year to more than 40%.
The retailer warned yesterday that the slump in the pound meant that the pressure to raise prices would be even greater next autumn and winter.
In its outlook for the rest of the year after a strong first six months, Next said that sales in September had improved and it could yet see benefits from the government’s fiscal stimulus that was announced on Friday.
Lord Wolfson of Aspley Guise, the company’s longstanding chief executive, said: “The scale of the August slowdown is indicative of a general weakening of underlying demand [and] the fact that the full effect of rising bills is yet to come means we are tempering our expectations.”
In an interview with The Times, the peer also predicted that the slump in the pound would create a second cost-of-living crisis.
Joules teeters on the brink
Meanwhile, Joules is considering turning to an insolvency procedure as it tries to cut its overheads and avert collapse.
The fashion retailer is working with Interpath Advisory on a company voluntary arrangement, which would pave the way for store closures, rent reductions and job cuts, according to Sky News.
The option has emerged weeks after talks with Next about an injection of funding were abandoned.
Joules employs more than 1,000 people and trades from about 130 stores, including one in Aberdeen's Union Square mall.
International markets also feel pain
Europe’s equity markets also suffered from the negative economic outlook. Germany’s Dax declined 1.7% and CAC40 in Paris fell 1.5%.
In New York last night the S&P 500 closed down 2.1% at 3,640.47 while the technology-heavy Nasdaq shed 2.8% to 10,737.51.
The Dow Jones industrial average fell 458.13 points, or 1.5% to 29,225.61.
Companies reporting today