UK services sector contracts at fastest pace since January 2023 as global shares tumble after US tech sell-off

UK services weakness deepens

The UK services sector contracted in June at the fastest pace since January 2023, adding to signs that the economy is losing momentum as flash survey data pointed to weaker demand and a softer business outlook.

S&P Global's flash UK services purchasing managers' index fell to 48.7 from 49.3 in May. A reading below 50 indicates contraction, and June's figure marked the joint sharpest decline since January 2023.

The survey also showed overall UK private-sector activity contracting for a second straight month. New business volumes fell at the fastest rate in 14 months, suggesting the weakness was not confined to one corner of the economy.

Services are the largest part of the UK economy, so a sub-50 reading is closely watched by investors and policymakers as an early signal of growth momentum. The latest data point to a subdued trading environment for businesses heading into the summer.

Sell-off spreads globally

The UK report came as global markets were already under pressure from a U.S.-led tech sell-off. Nasdaq futures were down about 2.7% in early European trading as investors moved away from high-growth names.

The weakness did not stay confined to U.S. markets. South Korea's Kospi fell 9.99% and trading was temporarily halted after the index dropped more than 8%, reflecting how quickly the rout spread through Asia.

European markets also turned lower, including the FTSE 100, DAX, CAC 40 and Stoxx 600. MarketWatch and The Guardian both reported the same broader market move, while Business Insider independently reported the sharp fall in South Korea.

The tone across markets was one of risk aversion rather than a single-country story. The sell-off in tech and AI-linked stocks fed into a wider retreat across equities, hitting both futures and cash markets.

Oil falls on Iran sanctions move

Brent crude also fell after the U.S. waived sanctions on Iran for 60 days. The move added a separate driver to the day's trading and raised the prospect of more Iranian oil entering the market if talks progress.

U.S. vice president JD Vance said talks with Iran had laid a "good foundation" for a final deal. That helped shape the oil-market response, even as the broader diplomatic situation remained fluid.

Lower crude prices could ease some energy-cost pressure if the Iran talks hold, but the situation is still subject to policy changes and further statements from Washington or Tehran.

What happens next

Flash PMI readings are early monthly estimates and can be revised, so traders and economists will watch the final June UK services data closely.

Investors will also be looking to see whether the tech sell-off persists into the U.S. session and whether the market reaction broadens further beyond Asia and Europe.

The next focal point for oil will be whether the sanctions waiver leads to more supply expectations or whether there is any reversal in the diplomatic tone. For the UK, the June PMI adds another warning sign for growth at a time when the services sector is already showing strain.