Tech rout weighs on UK markets ahead of open

European shares were set for a softer start on Wednesday, with UK investors bracing for a weaker open after a tech-led selloff on Wall Street and in Asia overnight. The risk-off tone, driven by stretched valuations and rising policy uncertainty, comes as traders look to Federal Reserve chair Jerome Powell’s remarks at this week’s Jackson Hole symposium and to UK inflation figures due later today.

Futures pointed to early pressure on tech and cyclicals after a broad retreat in semiconductor and AI-linked names in the United States spilled into Asia. The caution was compounded by firmer Treasury yields and a steadier dollar, typically a headwind for commodities and emerging assets. In London, rate-sensitive housebuilders and consumer discretionary names were expected to track the global tone, although energy stocks could take their cue from stable crude prices.

The macro calendar keeps investors anchored. Market participants expect UK CPI for July to edge higher, a development that would complicate the Bank of England’s path toward further rate cuts. A Reuters economist poll published this week suggested only one additional reduction is likely this year, underscoring the central bank’s sensitivity to wage dynamics and services inflation. “Sticky” domestic price pressures remain the dominant constraint on the pace of easing, analysts say.

Overseas policy signals will also frame the European session. The Fed’s July minutes are due later, while Powell’s Friday address is seen as pivotal for the near-term rates path. Risk appetite has also been shaped by geopolitical headlines around Ukraine, with investors digesting statements from Washington and Kyiv about the contours of potential security guarantees.

Commodity markets offered little relief. Oil was broadly steady in early trade as investors weighed supply fundamentals against macro uncertainties, while gold hovered near a three-week low as the dollar firmed ahead of Jackson Hole, a shift that typically tightens financial conditions for non-US buyers. “A stronger dollar and improving risk appetite from recent geopolitical developments are weighing on gold prices,” said Kelvin Wong, senior market analyst at OANDA.

Against this backdrop, sterling’s near-term direction is tied to the inflation print and any repricing of BoE expectations. Economists caution that a modest upside surprise in services or travel-related components could nudge gilt yields higher into the long weekend, reinforcing the divergence between equity multiples and policy reality. For UK investors, the early message is clear: risk budgets are likely to be trimmed until the data and Powell speak.