- FTSE 100 climbs 61 points to 9,177
- UK services PMI stronger than expected
- Gilt yields sent lower
- Budget date confirmed for November
- Chancellor Reeves says fiscal rules 'non negotiable'
4.50pm: FTSE 100 gains
The FTSE 100 finished Wednesday’s session strong, up 61 points at 9,177.
“Most European stock indices regained some of Tuesday's sharp losses while US markets were mixed as yields stabilized and Alphabet shares gained 7%, lifting the Nasdaq 100 and S&P 500,” IG senior technical analyst Axel Rudolph said.
Gold remained on track for its seventh straight day of gains, trading above $3,600 per ounce.
“Large ETF inflows, ongoing central bank purchases and flight-to-safety trading amid a near 92% chance of a September Fed rate cut, drive the precious metal price towards the $4,000 region,” Rudolph said.
4.16pm: FTSE finishing strong
The FTSE 100 has done pretty well today, in the context of recent days, up 0.6%.
Summing up the story of the day for markets: bond yields eased after some encouraging UK economic data in the form of the services PMI, and also as Chancellor Reeves assured that she would "keep a tight grip" on spending as she confirmed the date of the Budget.
New highs for gold prices still meant precious metals miners Fresnillo, up 7.7%, and Endeavour Mining, up 3.45%, topped the Footsie risers.
3.50pm: What do rising yields for life insurers?
The recent rise in UK gilt yields has mixed implications for life insurers, but the overall impact is negative for valuations, according to analysts at RBC Capital Markets.
They noted that "some investors compare the dividend yield of UK life insurance sector companies to UK gilt yields, using the spread between the two as a proxy for credit risk (offset by dividend per share and book value growth).
"As long-term rates rise, UK life insurers’ dividend yields appear relatively expensive compared to gilt yields, which tends to exert downward pressure on share prices.
"However, this trend has recently reversed, without any apparent cause, leading to a narrowing of the spread between the sector's dividend yield and gilt yields."
The analysts also highlighted negative implications for balance sheets, with equity positions falling as rates climb.
"This is a key area of focus," particularly for Phoenix Group Holdings PLC (LSE:PHNX) and Legal & General Group PLC (LSE:LGEN), "given the recent declines in IFRS shareholders’ equity."
3.38pm: Don't worry too much about 30yr rates, says BoE and others
Bank of England governor Andrew Bailey has been grilled in Westminster today.
Here are some of his quotes:
Asked why he thinks the UK has higher bond yields than France, even though the French debt to GDP ratio is higher, and the government is at risk of collapse, Bailey says France is "anchored by the ECB rates, which is 2% currently" compared to the 4% UK base rate.
He says the UK is “actually in the middle of the pack”, with Germany and Japan’s rates having gone up more than the UK, while the US has risen less.
Even though the 30yr gilt rose to its highest since 1998 this morning, Bailey says people shouldn’t "over focus" on this rate (see also earlier comments).
"It’s a number that gets quoted a lot. It’s quite a high number. It is actually not a number that is being used for funding at all at the moment."
"There is a lot of dramatic commentary on this but I wouldn’t exaggerate the 30-year bond rate."
Also today, Reuters quoted the global fixed income team at investment manager Neuberger Berman, highlighted a "notable pick-up in new issuance in bond markets that may have surprised bond market participants slightly".
In fact, this was the largest issuance day on record in Europe, with this week seeing the UK's largest sovereign issuance on record.
"As such, especially with expectations of lower rates having ramped up following Jackson Hole, the issuance has caused turbulence in the bond markets.
"However, one should not draw too many conclusions from one extremely active day for issuance.
"What can be said though is that market participants are again focused on deficits and political risk and this theme is likely to continue far into the year as the UK budget is now set to be on November 26, a long time from now."
David Roberts, head of fixed income at Nedgroup Investments, says the claims of a "buyer's strike" for bonds were demonstrably not true: yesterday's largest-ever bond issuance for the UK was met with "record-breaking demand" of £150 billion, while US corporate bond issuance hit a record of around $46 billion, with European sovereign and corporate debt supply exceeding €40 billion.
"Now, you can interpret this in two ways. Firstly, there’s a surge in supply, which can pressure prices.
"Secondly, and more importantly, there’s extraordinary demand - investors are actively seeking yield in a high-rate environment."
Gilt prices fell a little today, which was "largely in reaction to yet more upbeat economic numbers", says Roberts, the services PMI figures that showed the UK growing at a healthy rate.
"What you definitely can’t say is that there’s a buyers’ strike."
2.52pm: MIxed start on Wall St
A mixed start for US stocks.
The Nasdaq is up almost 1% and the Dow Jones is down 0.2%, while the S&P 500 has gained 0.4% in early trades.
Leading the Nasdaq and S&P higher is Alphabet, up 7.3%, and Apple, up 2.3%.
Alphabet is not in the Dow though, which is dragged down by a 1.5% fall for Boeing.
Nvidia is down slightly, while Amazon, Meta and Tesla are flattish so far.
2.31pm: ASOS teams up with John Lewis for Topshop relaunch
Under a new collaboration wth ASOS PLC (LSE:ASC), John Lewis will be the only store stockist for Topshop as the brand makes a return.
Topshop clothing will be available in 32 of its 36 stores from next February, with Topman in six.
Topshop is "a brand that is going to resonate with our gen Zs and our gen Xers and everyone in between", says John Lewis managing director Peter Ruis.
Topshop closed its UK high street stores in 2021 after owner Arcadia, run by Philip Green, collapsed into administration.
ASOS bought the brand from the administrators and relaunched the website last week.
2.07pm: Three months of speculation and uncertainty
It is 12 weeks until the budget, which the Tories say is a bad thing for the economy.
"Almost three months of speculation and uncertainty is a disaster for business and could be a death sentence for some," said Andrew Griffith, shadow business secretary.
"Few will hire or invest whilst waiting for the next tax axe to drop. It shows how little Labour understand or care about business."
1.34pm: Bond market 'warning shot'
There is no single reason for the recent rise in gilt yields, but government policy is "certainly a major contributory factor", says Ben Seager-Scott, chief investment officer at Forvis Mazars.
Broadly, there are general concerns globally about higher structural inflation and uncertainty around government policy, especially emanating from the US, which is pushing longer-maturity bond yields up around the world, he says.
He says the continued attacks by the White House on the Federal Reserve’s independence are like a waterbed, with risks that as short-term interest rates are pushed down this "ends up pushing long-term interest rate expectations (and therefore bond yields) higher".
As for the UK, the government has far from reined-in spending and the government hasn't been clear about how it will raise the magnitudes of tax revenue needed to meet the gap.
"What we are seeing now is a warning shot from the bond vigilantes that the government cannot once again just look to borrowing to plug the hole.
"The government naturally hopes that growth will fix this fiscal hole - but hope is not a strategy and the bond market is showing its impatience."
12.48pm: Reeves gives herself time to get ducks in a row
More thoughts on the Budget announcement.
Matthew Ryan, head of market strategy at Ebury, says the Chancellor "has given herself plenty of time to get her ducks in a row, opting for the latest possible date to call her autumn budget".
With sterling sent back a month this week amidst "panic selling" in gilts, particularly in the long-end of the curve, Ryan says this is "partly a global issue, instigated by fears over Fed autonomy and the sense that central bank officials may be prepared to allow US inflation to run hot".
"Concerns over the fragile state of the UK’s public finances, which simply refuse to go away, are fanning the flames".
While Reeves has given herself time, Ryan says "markets are fickle, quick to judge and slow to trust, and will punish the government if they fail to deliver a plan that guarantees fiscal sustainability.
"Further tax hikes are almost certain in order to plug the black hole in the public coffers, but that alone won’t wash, with investors baying for spending cuts, wary of a perpetual tax trap that could choke the life out of the UK economy."
12.16pm: Positive territory for FTSE and others
Just past midday, the FTSE 100 and 250 are moving higher in sync, up 0.5% and 0.6%.
This is in line with wider European markets, where Germany's DAX and France's CAC are up 0.7% and 0.9%.
US futures have also climbed into positive territory now, with the Nasdaq 100 up 0.7% nd the S&P 500 up 0.5%, while Dow Jones futures are just above flat.
11.34am: Movers and groovers
Some movers around the London market.
Hilton Food Group PLC (LSE:HFG) is flapping around and gasping like a fish out a water, down 16% after reporting seafood market pressures and some operational challenges, offseting strong performance in its retail meat and convenience businesses.
Broker Shore Capital says the results "make for mixed reading", saying it sees the seafood issues as "temporary pressures", including problems with smoked salmon arm Foppen exporting to the US.
Full-year results are still expected to be within the range of City analyst profit expectations, which ranged from £76.8 million to £81 million as of this week.
Maintel Holdings PLC (AIM:MAI) also plummeted, after a profit warning told investors that the company now expects revenue for 2025 to be about £95 million.
The cloud communication company cited delays in converting its pipeline and flagged the loss of a 'significant' key contract.
Narf Industries PLC (LSE:NARF), which sounds to me like a name for a company in a computer game, has seen its shares traded higher after it announced that its Ranger.ai cybersecurity platform has been approved as 'awardable' on the US Department of Defense’s Platform One marketplace - which means it is now readily accessible to buyers within the department.
Ranger.ai is designed to identify risks in open-source software before they escalate, with initial deployment focused on government clients, Narf highlighted.
Future plans include expansion to regulated industries such as defence, finance, and healthcare.
Elsewhere, Anglo American PLC (LSE:AAL) is up 3.3% despite the FT reporting that a probe is being launched into its $500 million Brazilian nickel sale.
11.11am: Budget announcement
The announcement from Rachel Reeves for this Labour government's second Budget "will be focused on stabilising an economy troubled by multiple setbacks and U-turns," says AJ Bell head of public policy, Rachel Vahey.
The year after the Budget has put Downing Street "under increasing pressure amid plummeting approval ratings", she says.
Reeves' announcement fires the starting gun for the OBR (Office for Budget Responsibility) to complete its assessment of the UK’s financial health, given government plans for taxation and spending.
Readings of the economy have been mixed, with a positive services PMI today, but GDP that has been weak.
"The government has precious few options to turn this picture around. After boxing itself into a corner at the election by promising not to raise rates of income tax, national insurance or VAT for ‘working people’, it has few options to increase taxation.
"Speculation will be rife in the lead-up to the Budget over what measures it will resort to."
10.55am: Bank of England likely to remain on hold for rest of year
The Budget will come after the Bank of England's November policy meeting, "diminishing the chances of tighter fiscal policy forcing another rate cut this year", says economist Rob Wood at Pantheon Macroeconomics.
He also says that the services PMI survey "tells a story of business being hit hard by those global and domestic shocks in the spring and recovering since".
"Underlying momentum is strong," he says, with the UK composite PMI hitting a one-year high as the services index reaches a 16-month peak.
Adjusted for uncertainty, the services PMI rose to the strongest in nearly two-and-a-half years, Wood says.
What it means for the BoE's meeting, he says, is that growth is "close to potential, putting the MPC in a tricky position, given that inflation is heading to double the 2% target shortly".
Rate setters will therefore "have to keep policy on hold for the rest of this year at least, as growth running around potential will fail to create the spare capacity needed to bring persistent wage and price inflation down"
Countering this hawkish take, he acknowledges, is the job market situation, with the PMI surveys pointing to around a 30K month-to-month payrolls fall in August despite the employment balance improving slightly.
"We continue to judge, however, that the balance of evidence points to slowly easing job falls," Wood says, with the PMI "one of the most accurate forecasters of payroll employment changes since 2023".
The survey also suggests a pick-up in price pressures, which is consistent with the MPC’s preferred measure of underlying services holding close to 4%.
10.29am: Reeves opts for late Budget
Rachel Reeves has scheduled the autumn Budget for 26 November, which is later than expected.
The Chancellor put out a video statement on social media, alongside official announcements.
Reeves's main three messages are that inflation and borrowing costs must come down, that she will keep a "tight grip on day-to-day spending" and that her fiscal rules are "non-negotiable".
This government will build an economy that works for working people, and rewards working people. pic.twitter.com/lAPR7RvX5Y
— Rachel Reeves (@RachelReevesMP) September 3, 2025
The Treasury confirmed the Office for Budget Responsibility has been commissioned to prepare its economic and fiscal forecasts for that date.
10.13am: FTSE perks up
The FTSE 100 does not seem to be as rattled now, helped by the services PMI maybe.
UK gilts have retreated from their peak and are down on the day at 5.689%.
Precious metals miners Fresnillo and Endeavour have been joined by base metals peers Antofagasta, Anglo American and Glencore at the top of the Footsie leaderboard.
Defence contractor Babcock International and travel companies InterContinental Hotels and IAG are not far behind, along with engineer Spirax and drugmaker AstraZeneca.
Sage advice on the bond market.
Chris Beauchamp, chief market analyst at IGm says while the 30-year yield has climbed above yesterday's high, the 10-year gilt yield "has not seen quite the same panicky reaction as its longer-dated cousin".
While he says bond investors "do seem to be sending a message to the UK government" that Westminster has been aware of for some time, "only when the ten-year shoots higher should we really start to worry".
For now, he says, "the government has the breathing space to take another hard look at the public finances - a combination of taxation and spending cuts remains the only way to retain credibility."
9.53am: Stock markets rattled
Stock market investors are "rattled" due to the unease in global bond markets, says Neil Wilson at Saxo.
After the pound's worst day since April, hitting a one-month low against the dollar and the euro, it has stabilised a bit today.
"Sterling’s move is a reflection of gilts," says Wilson. "The picture for bonds is not pretty, although so far the moves remain fairly orderly.
"Globally, whilst stocks are taking a bit of a hit for now, this is only really going to be material for equity markets if there’s a liquidity issue – which does not seem to be a problem right now. It could show up later on."
He calls the situation "more of a slow-motion train wreck than the flash-in-the-pan Truss episode", with the UK 30yr yield moving from yesterday's 27-year high this morning to above 5.75%.
"It’s not just the UK of course," he says, with the US 30yr just breached 5%, "a key threshold", while yields on French, German and Japanese bonds have also shot higher "as the entire complex has looked increasingly shaky... German fiscal expansion, debt trajectory worries in France and political chaos...it feels like a buyers’ strike".
Wilson says Chancellor Rachel Reeves should "create far more headroom" as "you can’t be constantly tweaking tax rates to meet arbitrary rules" and says markets ought to respond to this well as it "would anticipate that the government is taking charge of the situation rather than being buffeted by fractional changes in GDP and tax take".
The Bank of England could help by dialling back or stopping quantitative tightening, for instance, he adds (see three posts below).
9.39am: Stronger sentiment in UK's largest sector
On the PMIs, Tim Moore, economics director at S&P Global Market Intelligence, says that the August survey "highlights a welcome acceleration of output growth and a swift rebound in order books after July's dip, leaving the UK service economy on a much stronger footing".
The seasonally adjusted new orders index rose by the largest one-month gain since early 2021, indicating a "decisive improvement" in customer demand.
This was helped by greater domestic business and consumer spending, alongside the first increase in export sales since March.
"Hiring trends remained subdued in comparison to those seen for business activity and new order intakes," he says, with workforce numbers decreasing in each month since October 2024.
"Some firms also reported a focus on automation and investments in productivity improvements to help alleviate margin pressures."
Business activity expectations meanwhile hit a ten-month high, "providing a clear signal that growth prospects for the UK service economy have moved up from the lows seen this spring", helped by improved sales pipelines, lower borrowing costs and receding fears about US tariffs.
9.35am: Services PMI jumps
The UK composite PMI rose to 53.5 in August from 51.5 in July and above the flash estimate of 53.0.
This reflected a big rise in the services PMI to 54.2 in August from 51.8 in July, above the flash reading of 53.6.
Data were collected between 12 and 29 August.
9.22am: BoE decision on QT awaited
The Bank of England will announce its decision on quantitative tightening in a few weeks’ time, which could release some pressure on the Treasury.
Market focus has "ramped up with regards to what the BoE will do", said Deutsche Bank economist Sanjay Raja yesterday.
He expects the Bank to take a more cautious path forward when setting the pace and scale of QT.
The bigger question for the market will be on the Bank’s sales strategy, he added, due to rising gilt yields and worries about UK finances.
"With the long end of the gilt curve continuing to struggle, the case for the BoE to pause on long bond sales has strengthened.
"And what the Bank decides here can have important implications for long end yields."
He think the BoE will not pre-commit to any long-term sales strategy but is likely to set out any strategy on a quarterly basis, "giving the Bank more flexibility and optionality depending on market conditions".
9.08am: Vulcan Two makes AIM debut
Vulcan Two Group plc (LSE:VULCAN) has received a warm vulcan salute from investors as the buy-and-build outfit's shares began their first day's dealings on AIM this morning.
The company completed a £12 million fundraising at a price of 200p per share to support acquisition in the digital pharmacy market, giving it an initial market capitalisation of around £13.6 million on admission to the junior market.
Its shares rose almost 9% to 217.5p in early deals.
Investors seem to be hoping that the company will "live long and prosper", am I right?
8.56am: Tesco sues Broadcom and Computacenter
Tesco PLC (LSE:TSCO) has reportedly sued US colossus Broadcom as well as FTSE 250-listed reseller Computacenter PLC (LSE:CCC)) over licensing and support contracts for VMware software.
The FTSE 100-listed grocer's lawsuit claims breach of agreements signed before Broadcom’s acquisition of VMware in 2023, according to a report on The Register, which it says it is putting critical IT infrastructure supporting its stores in danger.
According to court documents seen by the website, Tesco says it bought perpetual VMware licenses with support through 2026, plus an option to extend, but claims Broadcom’s move to subscription-only support forces it to pay inflated prices for software it already owns.
Tesco alleges it is being denied upgrades, including to VMware’s Cloud Foundation 9, and blocked from essential patches unless it buys new subscriptions.
It is seeking at least £100 million in damages from each of Broadcom, VMware, and Computacenter.
No movement in the shares really this morning.
8.40am: Bonds keep rising
The FTSE is not moving much, with a small dip into the red and now back up 12 points.
Government bonds around the world are continuing to be sold off too, lifting yields. UK, US, German, Japanese and others are all rising.
UK 30-year gilts are at 27-year highs, US and German 30yrs close to financial crisis levels, while Japan's 30yr reached an all-time high and its 20yr yield the highest since 1999.
Market analyst Victoria Scholar at Interactive Investor says the FTSE 100 is "eking out a very modest gain" supported by gold miners as investors seek safe-haven assets.
"Limiting further upside for the FTSE 100 are the insurers M&G, Prudential, and Hiscox which are under pressure after M&G’s half-year profit missed expectations."
"Both the pound and the Japanese yen are also under pressure reflecting concerns about rising debts and weakening public finances in some of the world’s major economies."
China’s RatingDog private services PMI rose to 53 in August, the highest since May 2024, above the 50-boom-bust divide.
"However Chinese stocks markets were under pressure after President Xi Jinping warned of ‘peace or war’ during a military parade attended by Russian President Putin and North Korea’s leader Kim Jong Un," says Scholar.
8.15am: FTSE 100 inches higher, led by gold miners
The FTSE 100 has inched higher in the first trades of the day, helped by more progress for precious metals miners Fresnillo and Endeavour.
Ashtead Group PLC (LSE:AHT) is top of the pile, up 1.8% after reporting lower quarterly profits but raising its cashflow guidance.
Elsewhere, M&G PLC (LSE:MNG) is among the bigger fallers, down 2.5% despite reporting a much improved first-half performance.
8.03am: Google and Apple jump on court ruling
Google parent Alphabet has soared in afterhours trading after a US judge's ruling indicated that it will not have to separate off its Chrome browser business.
Alphabet Class A shares rose 7.1% to $226.30 and Apple shares rose 3%, as Judge Amit Mehta ruled that the ongoing $20 billion search deal between the two tech behemoths will remain and not be barred in its current form.
The Federal Court statement in the US versus Google antitrust case was that "Google will not be barred from making payments or offering other consideration to distribution partners from preloading or placement of Google Search, Chrome, or its GenAI products", the judge wrote.
Analyst Dan Ives at Wedbush says it was "a black cloud worry" over Apple and Google stock "as investors worried a Google Chrome breakup and/or forced to extinguish the search deal with Apple was potentially on the docket".
7.55am: Watches ticking on
Watches of Switzerland Group PLC (LSE:WOSG) says trading remained "strong" in the first 18 weeks of its new financial year despite the announcement of increased tariffs on Swiss imports.
UK demand remains stable, the FTSE 250-listed group said in a short statement ahead of its annual shareholder meeting on Tuesday.
No numbers were shared in the statement, though the timepiece retailer reassured that performance in both US and UK markets is "encouraging and in line" with the guidance for the full year to April 2026 provided in its July results.
7.28am: Markets due for a pull-back
Markets are "due for a pull back", says market analyst Kyle Rodda at Capital.com, pointing to seasonality stats.
For US equities, September is the worst month of the year for the S&P 500, with an average drawdown of nearly 2% over the past 10 years.
Higher global bond yields are putting the squeeze on global equity prices, "driven by a combination of factors: political risk in the US and Europe, loose and arguably unsustainable fiscal settings across several major sovereigns, and upside risks to inflation in the States as traders price-in the risk of a US Fed being stacked with Trump-loyal policy doves".
He highlights that Australia's ASX200 has experienced its biggest one-day drop since the Trump tariff tantrum of early April, down by around 1.5%, with every sector in the market lower.
Gold stocks were one of the few shining lights, which he says is "something of a bearish signal".
7.15am: FTSE seen flat as gold hits new heights
The FTSE 100 is expected to stabilise on Wednesday after dropping to a two-week low the day before, while the price of gold continued to climb overnight.
London's blue-chips have been called roughly flat on the futures market, having fallen almost 80 points or 0.9% to 9,116.69.
US stocks pared losses over the Wall Street session, though the Nasdaq Composite continued to fare worst, ending down 0.8%, followed by declines of 0.7% for the S&P 500 and 0.55% for the Dow Jones.
Asian markets are all in red as they catch up with the new dour mood, led by a 1.25% slide for the Shanghai Composite, a 0.9% reverse for the Nikkei and 0.6% for the Hang Seng.
Gold has reached new heights above $3,545 in the early hours this morning.