- FTSE 100 drops 55 points to 9,265
- UK gilt yields rise close to 27 year high
- US gov bonds spike after Trump Fed meddling
- UK retail price rises highest in 18 months
4.46pm: FTSE 100 pulls back
The FTSE 100 shed 55 points to finish Tuesday’s session at 9,265 amid threats to Fed independence.
“Risk appetite cooled significantly in Asia and Europe after President Trump moved to oust Fed Governor Lisa Cook, injecting uncertainty around the central bank's independence,” IG senior technical analyst Axel Rudolph said.
“French bond yields rose to levels last seen in mid-March, provoking a sharp sell-off in banks such as BNP Paribas and Société Générale, while the pan-European STOXX 600 slipped around 0.6% and the FTSE 100 also traded lower.”
4.07pm: FTSE not going anywhere
It does not look like the FTSE 100 is going anywhere but down today, sliding 0.6%, in line with the wider Euro Stoxx 600, as stocks come under pressure from rising bond yields.
France's CAC is the big sacrificial lamb for the markets today, down 1.5% due to domestic political worries.
Other markets are reacting mostly to Donald Trump, who fired off more tariff threats yesterday and said he aims to remove Fed governor Cook, unsettled investors and revived concerns about Fed independence.
Patrick Munnelly, market analyst at Tickmill, said: “UK equities tracked the global risk-off tone as Trump’s remarks rattled confidence in the Fed’s independence.
"Banks bore the brunt of the selling, with HSBC and Standard Chartered under heavy pressure, while rising gilt yields added to investor unease."
On the upside in London, Bunzl was top of the leaderboard, up almost 5% as it published interims and backed its outlook for the year.
Gold and precious metals miners Fresnillo and Endeavour Mining found support from firmer gold.
Elsewhere, AB Foods, Wickes, Kingfisher and Marks & Spencer all fell after Deutsche Bank downgraded the UK retail sector, citing slowing wage growth and rising unemployment risks.
UK bond yields tracked US Treasuries higher, with 30-year gilts at their strongest since early April and close to a 27-year high.
Bank of England policymaker Catherine Mann also called for keeping rates steady for an extended period, though stressing she would be prepared to cut aggressively if growth risks materialise.
3.17pm: Call for stamp duty reform
The UK's stamp duty land tax is well overdue for reform -- it's something that's been said a few times in recent weeks (and years), and Thomas Pugh, chief economist at leading auditor RSM UK, is making the case as we prepare for the Budget in the autumn, but criticising some of the proposed solutions.
The duty generates around £12 billion a year for the Treasury, but "actively distorts the housing market, discourages mobility and undermines economic efficiency", says Pugh, and from an economist’s perspective, is "among the most damaging mainstream taxes".
As it is a transaction tax levied when a property is bought, it "creates a clear disincentive for people to move home", he says, which carries wider economic costs.
"Labour markets work best when people can move easily to where jobs are most productive. But, stamp duty raises the cost of moving, reducing labour mobility and making it harder for businesses to recruit workers in high-demand regions. This is a drag on productivity growth and one reason behind the UK’s well-documented productivity problem."
It also means housing is allocated less efficiently, as some spare bedrooms sit unused while other families squeeze into homes that are too small, he says.
The design of stamp duty, where there are sudden jumps at price thresholds, "encourages bizarre behaviour", such as sellers pricing homes just below tax bands, while the top end of 12-15% is a "heavy deterrent" to transactions in London, the South East and some other areas.
Pugh says the least damaging taxes are those levied on immovable bases that do not distort behaviour – such as land values, while stamp duty directly deters transactions that are often beneficial both to individuals and to the wider economy.
He suggests updating valuations, and/or aligning council tax more closely with property or land values could be better for the Treasury without discouraging people from moving.
"Replacing stamp duty with a levy on houses when they are sold or some sort of capital gains tax as proposed in some reports is not much of an improvement on the current system."
Pugh says this could "make the system worse and introduce more cliff edges that disincentivise people from moving upwards or downsizing".
2.48pm: Wall Street dips at the open
Wall Street has opened moderately lower, with the S&P 500 down 0.1%, the Nasdaq dipping 0.2% and the Dow just below flat.
All of the Mag 7 apart from Tesla are in red, led by a 0.7% decline for Alphabet, with Nvidia roughly flat.
Biggest risers on the S&P 500 are Eli Lilly, up 3.7%, followed by AMD and IBM.
2.19pm: US goods orders still not recovered from Trump tariffs
There was a "big drop" in headline US durable goods orders due to a 40% plunge in the volatile aircraft orders component, says economist Oliver Allen at Pantheon Macroeconomics.
"Underlying orders were remarkably strong, and this strength looks relatively broad-based among the major sector-level components."
The 1.1% jump in orders ex-transportation was the biggest monthly gain since September, and implies a 0.8% increase in real terms, Allen says, given the 0.3% rise in PPI capital goods prices last month.
Meanwhile, the 1.1% leap in core capital goods orders took them to their highest level since November 2022, and also "suggests a solid gain in order volumes".
Allen says he underlying orders are also often volatile, and "some of the bounce last month might have reflected companies attempting to secure goods before the higher 'reciprocal' tariffs the Trump administration threatened to apply in early August".
The big picture, he says, is that "most indications of capex intentions have so far unwound only part of the plunge seen earlier this year" and recent agreements with big trading partners "have eased some of the uncertainty around tariffs, but only partially, and this uncertainty probably will remain a major drag on investment spending for the foreseeable future".
1.40pm: US durable goods drop
US durable goods orders dropped 2.8% in July, better than the consensus forecast for a 3.8% fall. Net revisions were -0.1%.
Orders excluding transportation leapt 1.1%, well above the consensus estimate of 0.2%. Net revisions were 0.1%.
Non-defense capital goods orders excluding aircraft jumped 1.1% too, with the consensus looking for 0.2%. Net revisions were 0.2%.
12.51pm: Caterpillar excluded over ethics
Norway’s sovereign wealth fund has excluded bulldozer company Caterpillar due to Israel’s use of its products in Gaza and the West Bank.
The $2 trillion sovereign fund yesterday added the US digger maker and five Israeli lenders to its list of exclusions, on top of over 20 other Israeli companies this year.
Caterpillar is the first major American company to be removed by the Government Pension Fund of Norway’s Etikkradet ethics council, which reviews investments that might contribute to violations of international law.
“There is no doubt that Caterpillar’s products are being used to commit extensive and systematic violations of international humanitarian law,” the council said in a statement.
The bulldozers was being used by Israeli authorities "in the widespread unlawful destruction of Palestinian property" in Gaza and the West Bank, the council said, adding that “the company has also not implemented any measures to prevent such use”.
"As deliveries of the relevant machinery to Israel are now set to resume, the council considers there to be an unacceptable risk that Caterpillar is contributing to serious violations of individuals’ rights in war or conflict situations,” it said.
12.14pm: European stocks in reverse, US futures in neutral
Losses for the FTSE have been trimmed a tad but all European markets are remaining firmly in reverse.
US futures are in neutral, with earlier skids mostly erased.
Dow Jones futures are down 0.1%, while those for the S&P 500 and Nasdaq are both down less even than that.
The US dollar fell sharply overnight, as investors reacted to Trump's announcement that he had ‘fired’ Fed governor Lisa Cook, but the dollar index is down only 0.2% now.
Cryptocurrencies have found a bid this morning, following a sharp sell-off at the start of the week and the sharp bounces on Friday following Fed Chair Jerome Powell’s dovish speech at Jackson Hole.
Stock indices are reflective of bond market reactions to Trump and investor positioning ahead of Nvidia’s earnings report tomorrow evening, says market analyst David Morrison at Trade Nation.
With Powell speech last week suggesting the central bank was ready to loosen monetary policy, interpreted by the markets as a green light for rate cuts to start from next month’s monetary policy meeting, the probability of a September cut stood jumped from 71% prior to the speech to 91%, before pulling back to 84%, according to the CME’s FedWatch Tool.
The 10-year US Treasury yield edged up to 4.30% this morning, as markets reassessed the impact of Powell’s dovish Jackson Hole remarks against the backdrop of political uncertainty, says Morrison.
Looking forward, Nvidia’s earnings report after Wednesday’s close is "without doubt the biggest event of the week", he adds, with the chipmaker accounting for 8% of the S&P 500 by market capitalisation.
"There has never been a single company that has that amount of influence on the index before."
US macro data to watch this week includes, there’s the weekly unemployment claims number on Thursday, followed by core PCE (the Fed’s preferred inflation measure) on Friday.
11.23am: Gold set to benefit from Trump's Fed moves
Some thoughts on President Trump's attempts to remove Fed governor Cook from UBS.
While the President said he has "sufficient cause to remove" Cook, UBS says the legal standards "are untested and likely to face a lengthy Supreme Court challenge".
The move also raises fresh concerns over the Fed’s independence, which has been a cornerstone of US monetary policy since the 1950s.
"Despite this renewed political pressure, we expect the Fed to remain data-driven and to cut rates by 100 basis points this cycle, starting with a 25bps reduction in September.
"We take the escalation as bearish for the back end of the Treasury curve, but we continue to see attractive risk-reward in high-grade and investment-grade bonds, with quality fixed income offering a way to lock in still-elevated yields now.
"An extended confrontation could further benefit gold prices, in our view, which we now see reaching USD 3,600/oz by end-March 2026."
11.08am: Bond yields driven up after Trump's Fed move
Financial pages are awash with reaction to Trump's late-night statement that he is removing Fed governor Cook.
Cook says the president had "no authority" to fire her and that she intends to remain in office.
US government bond yields have risen, with UK gilts reacting this morning, with the 30-yr bond back above 5.6%, a level it breached in April for the first time in decades and, Bloomberg notes, is close to a 27-year high.
Given recent newsflow on Cook and fellow Fed governors Kuegler, the Fed is now subject to "intensifying fiscal dominance risks", says Deutsche Bank forex strategist George Saravelos.
"What is a bigger surprise to us is that the market is not more concerned."
The FT has been polling expers, with a professor at Columbia Law School saying Trump's attempted removal of Cook is "unprecedented" and if it sticks "it spells something close to the end of central bank independence in the US".
David Wessel, director of the Hutchins Center for Fiscal and Monetary Policy at the Brookings Institution, warned the newspaper that Trump "seems determined to control the Fed".
The move comes just weeks after Trump fired the head of the Bureau of Labor Statistics following a disappointing NFP jobs report.
10.42am: BAT finance chief flies the roost
British American Tobacco PLC (LSE:BATS) shares dropped after the cigarette maker's finance chief stepped down with immediate effect.
Soraya Benchikh is stepping down from the board with effect from today, the FTSE 100 company said, though she will remain available until the end of the year to support the transition to a successor.
BAT said the recruitment process to identify a new CFO is being launched, with the role to be filled temporarily by Javed Iqbal, who is currently the director in charge of digital and information. He has previously worked as interim finance director in 2023 and 2024.
AJ Bell's Russ Mould has chipped in again, saying the immediate exit of a finance chief at a company always "raises alarm bells".
However, they added that the statement included "no suggestion of anything amiss", further reassured that Benchikh will be available to support the switchover until the end of the year.
"Nonetheless, her sudden exit still raises some questions and the market may be disappointed a key architect in turning around the company’s financial performance will no longer be a part of the management team – particularly as she has not been there that long."
10.10am: Coffee deals brewing
Something is brewing in the coffee sector, analysts are highlighting.
JDE Peet's, the European parent company of the Peet's Coffee Californian gourmet brand, is being scooped up by Keurig Dr Pepper Inc (NASDAQ:KDP) in an all-cash transaction worth about $18 billion (£13.6 billion).
There was also speculation at the weekend that Coca-Cola Co (NYSE:KO) is looking to offload Costa Coffee.
Coke is working with investment bank Lazard to review options, including a potential sale, of the British coffee chain, Reuters reported.
What’s peculiar, says market analyst Russ Mould at AJ Bell, is the timing of such deals, with coffee prices having doubled between January 2024 and March 2025 due to weather/climate conditions hitting supplies while costs for farmers and the supply chain also rose.
"Big coffee brands had to put up prices and not every caffeine drinker was able to stomach the extra cost. That caused a headwind for the sector," says Mould.
With both packaged coffee brands and high street chains having been hit, it "seems an odd time for M&A in the sector", says Mould.
"One would normally expect deals when a market is in good health, not when it is reeling from intense cost pressures."
He says Costa "always seemed an odd brand" to sit inside Coca-Cola’s portfolio and it has struggled to fight off competition.
9.19am: France's CAC tumbles
The FTSE 100 is little moved after its initial lurch lower, down 0.6%, in line with a similar fall for Germany's DAX.
Bigger drama is reserved for France's CAC 40 index, down 2.2% as the country's Prime Minister yesterday called for a confidence vote in the government.
François Bayrou said on Monday that he would seek parliamentary backing for his plans to shore up France’s ailing public finances, with a vote on 8 September,
As this could see the government toppled in two weeks' time, says market analyst Neil Wilson at Saxo, that has pushed up French bond yields and could see them rise above Italy’s.
Stock declines in Paris as being led by Societe Generale, down 7.5%, followed by 6%-plus losses for other banks, BNP Paribas and Credit Agricole.
Vinci, the construction giant is next, down almost 6%, followed by insurer AXA, down 5.7%.
"Political uncertainties are hard for markets to deal with. We are going through one of those periods today. After a long summer calm, get used to it," says Wilson.
He's also talking about President Trump's late-night announcement that he is firing Federal Reserve governor Lisa Cook, "effective immediately".
Says Wilson: "It’s going to be virtually impossible for the next chair to do anything other than Trump’s bidding. This should be negative for the dollar.
"The question for markets right now is about the September meeting but be in no doubt that we are witnessing a regime shift like we have not seen in decades."
While markets "invariably struggle" with the political uncertainty as seen in France, Wilson says, "in this case it’s a bit more obvious what is at stake.
"The vote is over the budget which is required for fiscal consolidation – delaying or ditching reforms will make the debt situation more untenable, and weigh on the economy.
"But there is a wider issue at stake over the fragile nature of the ruling coalition and whether Macron is just delaying the inevitable election that could see Marine Le Pen’s FN take over."
8.31am: Food price inflation rises, non-food deflation continues
Retailers like Primark and Kingfisher are down, presumably in connection with prices data released overnight, which showed non-food deflation continuing.
There's also a "more cautious view on the UK consumer" from Deutsche Bank, which includes downgrades to Kingfisher, AB Foods and Wickes.
Shop price inflation stepped up to 0.9% in August from 0.7% in July, the highest level since March last year, recorded by the shop price monitor (renamed from the shop price index) collected by the British Retail Consortium and NIQ.
Non-food prices were down 0.8% year on year, easing slightly from -1.0% in July and the three-month average of -1.0%.
Food inflation increased to 4.2% in August from 4.0% in July, led by higher fresh food prices.
"Staples such as butter and eggs saw significant increases due to high demand, tightening supply, and increased labour costs," said BRC chief Helen Dickinson.
"Chocolate also got more expensive as global prices of cocoa remain high owing to poor harvests."
NIQ's Mike Watkins said higher prices reflected "global supply costs, seasonal food inflation driven by weather conditions, the conclusion of promotional activity linked to recent sporting events, and a rise in underlying operational costs".
8.16am: FTSE slides lower, led by retailers and financials
The FTSE 100 has dropped 53 points to 9,268 in initial trading.
Only 15 of the index constituents are in green this morning, with losers led by retailers, food & drink producers and financials.
Primark owner AB Foods is bottom of the list, down 4%, followed by B&Q owner Kingfisher, Coca-Cola HB, Prudential, BAT, Weir Group and NatWest.
7.58am: Bunzl backs outlook
Bunzl PLC (LSE:BNZL), the FTSE 100-listed distributor of consumable products, has revealed a decline in profit in the first half of the year but resumed its share buyback.
The buyback had been scrapped alongside a profit warning in April due to operational challenges in North America, but chief executive Frank van Zanten said actions taken in the largest American business "have re-energised the team and we are seeing early positive indicators of success".
For the first six months of the year, revenue rose 0.8% or 4.2% at constant currency rates, while adjusted operating profit declined 11.2 (7.6% at CCR), with the operating margin falling from 8.0% to 7.0%.
Guidance has been reiterated.
7.42am: Wood Group accepts lower offer
The board of John Wood Group PLC (LSE:WG.) said it is minded to accept the reduced possible offer of 30p per share from Dubai suitor Sidara, which has now completed its due diligence.
Sidara has confirmed its intention to make an offer once the remaining pre-conditions are satisfied. The PUSU deadline has been set for this Wednesday.
Wood confirmed that commercial alignment has been reached with its lenders on the proposed refinancing terms and work is ongoing on the publication of its audited 2024 accounts.
7.26am: Trump calls for removal of Fed policymaker Cook
European futures are down further than the Footsie, with France's CAC and Germany's DAX and called 1% and 0.5% lower.
The big topic for interest rate watchers this morning is Donald Trump's move to dismiss Fed governor Lisa Cook over alleged mortgage fraud.
Cook has said Trump has no authority to fire her and she will not resign.
Analyst Ipek Ozkardeskaya at Swissquote Bank said Trump is keeping markets "on edge" by announcing this move, though the fraud allegations are "unlikely to be the real reason Cook is in the firing line".
"She has been outspoken about the inflationary impact of tariffs, warning last June that 'Trump-style tariffs' would complicate the Fed’s job by pushing up prices and forcing policymakers to keep interest rates higher for longer.
"That is precisely the message Trump does not want to hear."
For markets, Ozkardeskaya adds this "reignites concerns about the independence of the Fed, and by extension undermines confidence in the US as the global benchmark for transparent and rules-based capital markets".
The US dollar halted its Monday rebound, with two-year Treasury yields easing on expectations that Cook will eventually be replaced by someone aligned with Trump’s push for rate cuts regardless of the economic backdrop, while the 30yr US government bond yields erased their Jackson Hole decline.
"The result is a steepening curve, built on the view that near-term rate cuts will translate into higher long-term inflation."
Trump posts a letter stating that he is removing Fed Governor Lisa Cook
— Acyn (@acyn.bsky.social) August 26, 2025 at 1:07 AM
Also, in a post on his social media platform last night, Trump also threatened extra tariffs on countries that "attack our incredible American tech companies" with "digital taxes, legislation, rules or regulations". The UK and EU both have taxes designed to limit the power of US tech giants.
7.15am: FTSE 100 called lower after bank holiday
The FTSE 100 is predicted to be knocked back at the start of this holiday-shortened week, echoing declines on Wall Street yesterday when Brits were on the beach.
On the futures market, the London index has been called 23 points lower for Tuesday, wiping out the 12 points made on Friday and a portion of the 182 gained last week as the benchmark closed at 9,321.4.
US stocks had a down day yesterday, with the Dow Jones falling 0.8%, the S&P 500 dropping 0.4% and the Nasdaq Composite losing 0.2%.
"Wall Street pulled back as it blew off some froth following Friday’s post-Powell rally. Volumes were low and thin summer trading conditions have returned as the next impetus for the markets are sought," says market analyst Kyle Rodda at Capital.com.
He says these could include Nvidia’s quarterly results mid-week and the US PCE inflation data on Friday.
Nvidia's numbers "transcend just the company", he says, as "not only does the $4 trillion company hold significant sway because of its heavy weight in the S&P 500 and NASDAQ, but it also tells a clear macro, artificial intelligence and geopolitical story".