FTSE slides as rising bond yields and oil-driven inflation worries bite markets
The FTSE 100 dropped on Tuesday as higher bond yields, inflation anxieties and elevated oil prices kept investors on the sidelines.
The FTSE 100 closed lower on Tuesday, with the FTSE 250 and AIM all-share indices also declining, as bond yields surged and oil prices remained high. US 10-year Treasury yields rose to 5.01% and UK 10-year gilts hit 5.41%, both marking 19-year peaks, prompting fears of further interest-rate hikes. Susannah Streeter of Wealth Club highlighted the lingering volatility caused by elevated energy costs and the protracted Iran-involved conflict, suggesting companies may be forced to raise prices across many sectors.
Meanwhile, UK labour market data showed a drop in payrolled employees and a slowdown in wage growth, reinforcing expectations of a cautious stance from the Bank of England. Morgan Stanley now forecasts a quarter-point Fed increase, while Peel Hunt analyst Kallum Pickering predicts the BoE will hold rates before cutting later next year. Defensive stocks such as Babcock International and BAE Systems rose, whereas Trustpilot fell after accounting adjustments, illustrating mixed corporate reactions amid the broader market unease.
Why it matters
Rising yields and inflation fears signal tighter credit conditions that could slow global growth.
How this story developed
- Aug 19 Fed officials warn higher rates may be needed if inflation stays elevated
- Sep 8 Iran announced it will double the price of fuel consumed beyond its quota.
- Sep 8 Iran’s Fars news agency reported an explosion heard in the southern Jask area off the Gulf of Oman and east of the Strait of Hormuz.
- Sep 9 The buyback size was increased from $4 billion to $6 billion.
- Sep 10 Oil prices have risen above $95 a barrel amid renewed Middle‑East tensions.
- Sep 10 New reporting highlights a sharp inflation jump and rising fuel costs, reinforcing expectations of a deposit‑rate increase.
- Sep 10 The ECB implemented a 0.25‑point rate increase across its three principal rates.
- Sep 11 Asian stock markets fell on Friday, mirroring Wall Street losses, while Brent crude rose above $108 a barrel as geopolitical strains between the United States and Iran intensified.
- Sep 11 Fed minutes revealed a 9‑3 vote to keep rates near 3.6% and a drop in market odds for a September hike to about 67%.
- Sep 11 August US CPI held steady at 3.4% year‑over‑year and core CPI fell to 2.4%.
- Sep 12 Oil prices rose to just below $109 a barrel as Middle‑East tensions escalated.
- Sep 12 Markets priced in a strong chance of another quarter‑point hike in December.
- Sep 13 Donald Trump told reporters in Ireland that the United States should maintain the lowest interest rate globally, regardless of the Federal Reserve's upcoming decision.
- Sep 15 Trump delivered the remarks at a press briefing during the Irish Open.
In this story
Related stories
26 in this thread