- FTSE 100 falls 27 points to 9,223
- Babcock retreats after keeping outlook steady
- Halma hits an all-time high as guidance upped
4.19pm: FTSE and Wall Street remain in red
The FTSE 100 is on track to give up most of the gains added yesterday.
Pressure from bond markets is one reason cited below.
Leading the fallers is ConvaTec Group, on the back of the threat of potential new US tariffs on medical devices and paraphernalia.
Lenders Barclays, Standard Chartered and NatWest are also on the slide, all of which have a sizeable investment banking arm.
Others declining include Howden Joinery, Experian, Ashtead and AstraZeneca.
US stocks are remaining negative too, but not as bad as they started out.
"Investors are bound to be nervous in this period of all-time highs for US stocks, weak seasonal trends and following a speech by Powell that has caused some of the post-Fed dovishness to be wound back," says Chris Beauchamp at IG.
Today’s revised GDP data, jobless claims and durable goods order were pretty much all better than expected and prompted stocks to head lower, tempting out the dip-buyers.
"Of course, a sustained pullback over the next two or three weeks would doubtless be welcomed by many, but markets are rarely so obliging."
3.09pm: Bonds up as Fed rate cut hopes lowered
Bond markets are in focus again, with yields rising around the world, with US and UK gilts putting pressure on stocks.
US yields are also higher after an upgrade for Q2 growth, with US GDP up 3.8% in the last quarter, driven by the personal consumption index rising 2.5%, beating estimates of a 1.7% reading.
There was also good news around inflation: the GDP price index was 2.1%, and the core PCE index was 2.6%, up a notch from the previous reading of 2.5%.
"The bond market is reacting to the better-than-expected US GDP data, as it leads to questions about whether the Fed needs to cut rates further, especially since inflation has picked up in Q3," says Kathleen Brooks, research director at XTB.
"Added to this, more current economic data was also positive for the US economy. There were signs that the labour market is picking up. Initial jobless claims fell to their lowest level since mid-July, and durable goods orders were also stronger than expected."
The strength of the US economic data has led to a mini recalibration of US interest rate expectations.
On Wednesday, the market was pricing in a 90%+ chance of a rate cut in October, that is now 83%, Broosk notes, with expectations for a December also been scaled back.
For UK gilts, political risks are rising, says Brooks.
UK government bonds spiked a little on reports that Andy Burnham, the mayor of Manchester, is being touted as a potential replacement for Kier Starmer as Prime Minister.
"Although Starmer is unpopular and the government’s approval ratings are through the floor, a change of leadership could exacerbate the UK’s fiscal problems even more," says Brooks.
Yields on 10-year gilts rose to a three-week high today, though while 30yr and 2yr yields are rose, they are not up much.
"Burnham’s rhetoric of nationalizing utilities and questioning why the government needs to be in ‘hock’ to the bond market, has awoken the bond market vigilantes," says Brooks.
So, October could be another challenging month for stocks, she says. "After defying seasonal weakness in September, October could prove to be a tougher month for stocks, especially if cracks start to appear in the narrative around Federal Reserve rate cuts."
2.45pm: Wall Street sell-off
US stocks have plunged at the open, led by tech and small caps.
The tech-powered Nasdaq has dropped 1.2% and the more domestically focused small and mid-cap Russell 2000 is down 1.9% and the S&P 500 has dropped 0.9%.
It's a smaller fall for the Dow Jones, which is down 0.45%.
Nvidia, Alphabet, Meta, Broadcom are all down over 1%, while Tesla and Oracle are down more than 3%.
2.27pm: Marks warning
Marks Electrical Group PLC (AIM:MRK) shares have plummeted 20% after a profit warning, but there is "zero read-across" to AO World PLC (LSE:AO.) and Currys PLC (LSE:CURY), says analyst John Stevenson at Peel Hunt.
The Marks Electrical warning comes with sales declines in Q1 continuing across the first half and management speaking of tough market conditions, overlaid with increased operating and distribution costs.
"In our view there is zero read-across to Currys and AO, both of which reported strong sales in MDA [major domestic appliances] and wider electricals."
He says: "AO’s operating model benefits from the group’s scale, which Marks Electrical is currently struggling to build," the analyst said.
1.24pm: BP pushes back prediction for peak oil demand
BP PLC (LSE:BP.) has pushed back its forecast for peak global oil demand back from five years from its calculations just one year ago, which it says it a consequence of "another year of lacklustre gains in energy efficiency".
In its 2025 Energy Outlook, the oil giant models two scenarios: one "current trajectory" is based on existing policies and pledges, while the other "below 2°" scenario looks at what demand might look like if carbon emissions a cut 90% by 2050 from 2023 levels.
Under the current trajectory, global oil demand is expected to hit a peak of 103.4 million barrels per day (mbpd) in 2030, before steadily falling to 83 mbpd by 2050.
Last year, peak demand was expected to be this year at around 102 mbpd.
Under the Below 2° scenario, BP's chief economist Spencer Dale reckons demand would peak this year at 102.2 mbpd and then plunge to 33.8 mbpd by 2050.
12.50pm: ConvaTec hit by US tariff probe
ConvaTec Group PLC (LSE:CTEC) is among the fallers, part of a wider European medtech sell-off, after the US Department of Commerce said tariffs could be imposed.
An investigation into the importing of medical consumables and medical equipment was launched earlier this month, the agency said overnight.
It cited to laws that allow the US government to impose tariffs on goods it considers vital to national security.
ConvaTec shares are down 4.4%, while elsewhere in the FTSE 350 Smith & Nephew PLC (LSE:SN) shares are little moved, while among smaller caps, Integrated Diagnostic Holdings and Advanced Medical Solutions are also down around 4%.
On mainland European markets, there are falls for Philips, Siemens Healthineers and most of the sector.
12.22pm: FTSE wallows, Wall Street futures join in
After the midday yard-arm has been passed the FTSE 100 remains underwater.
Top fallers include Phoenix Group and Endeavour Mining, both ex-dividend today, along with Rightmove.
Others include ConvaTec, United Utilities and Ashtead.
US futures are in the red at the moment, led by the Nasdaq's 0.4% decline, with S&P 500 futures down 0.3% and the Dow Jones 0.1%.
"Traders have dialled back their Fed rate cut expectations a touch," says market analyst David Morrison at Trade Nation, following the speech from San Francisco Fed president Mary Daly yesterday.
Daly said further interest-rate cuts would probably be required, but that the Fed should exercise caution, while Fed chair Jerome Powell had sounded quite hawkish when he suggested that the path for future rate cuts was far from clear and that the US central bank faced a “challenging situation", with equity prices "fairly highly valued".
There are more Fed speakers expected today, while there’s also a stack of economic data, including an update on second quarter GDP, durable goods, weekly unemployment claims and existing home sales.
"Overall, US equities are taking a breather, with the S&P 500 currently down around 1% from Monday’s record closing high," says Morrison.
"The US dollar has steadied since the DXY index hit a multi-year low just over a week ago. Where it goes from here is likely to be determined by incoming data, particularly by job numbers and tomorrow’s PCE inflation update. Traders will also pay close attention to central bank commentary and a clutch of speeches from Fed members."
On the pound, Edward Allenby, economist at Oxford Economics, the recent appreciation looks "overdone and the pound is vulnerable to a depreciation".
His current forecast projects that the pound will hold steady against the dollar in a 1.33-1.34 range, as he expects the recent weak-dollar narrative will extend into next year.
"But the UK's challenging fiscal position has kept markets volatile in recent months, and the upcoming Budget could provide a catalyst for sterling to reprice if the government is unable to convince investors that its plans will restore the public finances to a sustainable path," he adds.
11.59am: Ebury digs up IPO plans
Ebury, the Santander-backed fintech, is reviving plans for a potential £2 billion London IPO.
The international payments specialist and its advisers are aiming to float in the first half of next year, financial newshound Mark Kleinman at Sky News has found out.
A mooted £2 billion flotation earlier this year was knocked off course by volatile market conditions, with Sky saying that valuation is still being sought and Santander "unlikely to proceed" with if that figure is not attainable.
11.09am: JD begins share buyback
JD Sports Fashion PLC (LSE:JD.) said today that it will start its new £100 million share buyback today.
In yesteray's results the retailer said the programme would begin "soon".
Broker Peel Hunt is expected to complete the process by the 31 January 2026 year-end.
10.52am: Moderna sticks with UK investments
After Merck, AstraZeneca and Eli Lilly have pulled investment from the UK, US drugmaker Moderna Inc (NASDAQ:MRNA) has backed Britain.
Moderna yesterday opened a £150 million vaccine site in Oxfordshire, with UK general manager Darius Hughes saying the company would continue to invest in the UK.
"We’re here to invest," he said Hughes. "We’re here on a 10-year strategic partnership, and we will be investing heavily in R&D across that period."
Also yesterday, Eli Lilly's CEO said this week that the UK is "probably the worst country in Europe" for drug prices.
Hughes said this was "harsh" but said Moderna was "in a different place. We’re here for pandemic preparedness, for the vaccine programmes, and to help protect British patients over the winter."
10.07am: SSP flies higher as activist promotes idea of takeover
SSP Group plc (LSE:SSPG) shares are up over 6% after it emerged that activist hedge fund Irenic Capital is trying to rustle up interest in a take-private deal.
The Upper Crust owner, in which Irenic owns around a 3% stake, has been promoting the potential benefits of a leveraged buyout with investment bankers and private capital firms in recent weeks, the Financial Times reported this morning.
New York-based Irenic, founded by former Elliott Management portfolio manager Adam Katz, reckons SSP could be valued at a 50% premium to its current market value.
Irenic used a different playbook when it took a stake in Wagamama owner The Restaurant Group in 2023, calling for the replacement of management before a campaign to encourage buyer interest resulted in a takeover by private equity group Apollo.
9.39am: Co-op flipped into loss after £206m cyber attack impact
The Co-operative Group said at least £206 million in sales were wiped out by the cyber-attack that paralysed systems of its grocery stores in April, plunging the mutual into a hefty loss for the first half of 2025.
The attack disrupted payments, stripped shelves bare in some stores, and exposed personal data such as names and addresses of all 6.5 million members.
For the six months to July 5, the Co-op swung to an underlying pre-tax loss of £75 million, compared with a £3 million profit a year earlier.
9.12am: Are we at the top or could we go higher?
The FTSE 100 "looks a touch delicate" after finishing on a high yesterday, says market analyst Neil Wilson at Saxo, seeing it as a hangover from yesterday's mining binge when copper prices spiked after Freeport-McMoRan warned of lower supply due to the suspension of its Grasberg Block Cave mine in Indonesia, the world’s second largest copper mine.
While the London benchmark is just below flat, there is broad weakness across European equity markets, with the DAX and CAC indices down 0.3% in FGrankfurt and Paris, tracking declines in New York overnight.
Precious metals miner Fresnillo is up but Endeavour is down after gold moved quite a bit lower yesterday, but is on the way back up today.
Wilson wonders if the market "top" has been passed.
"Are things rolling over? This is a classic grind higher - but AI bubble worries are all to see. Was Nvidia's $100bn deal with OpenAI the top? It could be," he says.
Economist Ed Yardeni pointed out yesterday that the S&P 500 forward price-to-earnings ratio is at a near record high of 22.8 - the tech bubble burst after it reached a peak of 25.0 in late 1999.
Wilson says Q3 earnings season is "almost upon us and could be again surprisingly good".
After sterling fell yesterday after BoE governor Andrew Bailey hinted at further cuts, the pound is flat this morning.
"The market is way too hawkish on what the MPC does now," says Wilson. "It's not just the Bank of England in focus though as there are signs of weakness from a couple of recent gilt auctions suggesting investor doubts creeping in ahead of the Budget."
8.43am: Halma hits new high
Halma has hit a new all-time high now, up almost 3% to 3,430p.
Analyst Lauren BakerIguaz at Peel Hunt says the safety products group delivered "strong growth in 1H, despite varied market conditions and a tough economic and geopolitical environment".
She said it was "a strong first half for Halma" and she reiterates her 'add' recommendation.
Alex O’Hanlon at Panmure Liberum notes that the shares currently trade on at 32 times forecast earnings, a premium to the peer group, "but we believe this is justified given its low earnings volatility and acquisition track record which today's announcement continues to reinforce".
8.33am: Babcock shares fall despite confident statement
The confident statement on the macro environment from Babcock is somewhat at odds with commentary from other CEOs in recent months, says market analyst Richard Hunter at Interactive Investor
"It is an unfortunate sign of the times that the defence sector is booming, although that particular tide is lifting all boats," Hunter says.
"Indeed, given the general economic difficulties which many companies are currently facing, Babcock’s comment that the 'macro environment remains supportive' is one which is rarely heard from boardrooms at present."
Babcock shares are down 2.2% now, but the company remains busier than ever, having has received several contracts of note, including a £65 million Type 31 frigate programme, a £114 million submarine disposal defueling and an (Australian) $250 million, eight-year follow-on contract with the Australian Border Force.
Hunter says there is "a slight blot on the landscape with lower revenues in its Land division", which accounts for 23% of sales, due to lower Rail business, though the slack has more than been picked up elsewhere.
He says additional contracts signed in the past five months "add some further visibility to earnings, which is an important development – and add to the previously reported £10.4 billion contract backlog - which can support what is becoming an increasingly stretching valuation given the more recent strength of the share price."
Expectations have been high, which Hunter says has "weighed on the opening reaction to the update, but for the most part the likes of Babcock have lived up to their billing", with the shares having risen by 156% over the last year, as compared to a gain of 11.9% for the wider FTSE 100.
8.16am: FTSE 100 opens lower
The FTSE 100 has dropped 35 points to 9,216 in opening trades, led by a mix of medical, mining and a financial companies.
ConvaTec (down 4.8%), Phoenix Group (down 4.75%), Endeavour Mining (3.7%) and Antofagasta (2.1%) are the biggest fallers in initial deals.
Rio Tinto is top of the early leaderboard, up 1.8%, followed by Halma PLC, on the back of its update below.
8am: Markets overview
Profit taking has been the story in wider markets this week, says Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Preference for risk was limited across European and US indices yesterday, she notes, "as investors likely decided to take profits on the latest rally and step aside before fresh data hits".
Today, traders' eyes will be on the latest update on US GDP, which is expected to have rebounded to 3.3% in the second quarter following a sharp disruption from the trade war in Q1, supporting the narrative aqbout the economy enjoying a soft landing from Donald Trump's new policies.
"But a soft landing is a double-edged sword: a stronger-than-expected print could reignite concerns that the Fed may refrain from cutting rates further, especially next year when Fed members hold divergent views.
"That scenario would push bond yields higher, strengthen the US dollar and weigh on equities.
"Conversely, a softer GDP read would likely bolster bets on further Fed easing, sending yields lower, lifting stocks and softening the dollar.
"Combined with tomorrow’s PCE data, today’s GDP print could set the tone across bonds, stocks and currencies after weeks of dovish shifts in Fed expectations."
She says it’s not just US debt that’s unloved, British gilts remain out of favour as well.
"This week’s UK Treasury auctions highlighted growing investor unease: demand for the 30-year bond was the weakest since 2022, while the 5-year sale had the thinnest cushion in nearly two years.
"Tepid appetite underscores how rising budget concerns are weighing on long-term debt and, in turn, UK growth prospects, at a time when inflation pressures keep the Bank of England’s (BoE) hands tied.
"Sterling looks unappealing ahead of the Autumn Budget."
Also today the Swiss National Bank is expected to maintain its policy rate at 0% as "returning to negative rates could be a step too far given the current economic backdrop and franc’s stability".
7.51am: Halma hikes revenue guidance
FTSE 100 safety products group Halma PLC (LSE:HLMA) has nudged up its full-year outlook, now expecting "low double-digit" percentage organic constant currency revenue growth, up from previous guidance of "upper single digits".
The upgrade has been driven by stronger-than-expected growth in photonics in the Environmental & Analysis sector, while order intake remains ahead of the prior year.
Profit margin guidance was unchanged.
With strong cash generation supporting investment and acquisition capacity, two acquisitions were completed: underground drilling location systems specialist Brownline for £129 million and cryogenic therapy engineer Nu Perspectives for £1.5 million.
7.38am: Goldman's Petershill Partners investment trust to go private
Petershill Partners PLC (LSE:PHLL), the investment company run by Goldman Sachs, plans to return its $921 million to shareholders and delist from the London Stock Exchange.
Ordinary shareholders (ie not the Goldman-managed private funds that own 79.49% of the shares) will receive US$4.15 per share in cash and a US$0.052 dividend, making for a total payout per share of US$4.202, a 41% premium to the six-month average share price.
Despite strong financial performance and strategic initiatives, the board believes the share price has "not appropriately reflected the quality and underlying value of the company's assets, its strong financial performance and attractive growth".
7.25am: Babcock in line
Babcock International PLC (LSE:BAB) says trading in the first five months of its financial year has been "encouraging", with organic revenue growth and underlying operating margin progress in line with board expectations.
The defence contractor is keeping guidance for the full year unchanged, having upgraded it medium-term outlook in June.
Strong growth in its Nuclear division, driven by civil nuclear projects and submarine support contracts, and the Aviation wing, as a result of the ramp-up of the French Mentor 2 pilot training contract, as well as ongoing growth in Marine was partly offset by lower revenue in Land, due to lower activity in the rail business.
The £200 million share buyback announced at results in June is around 25% complete, it added, with the programme set to be wrapped up by the end of the financial year.
7.16am: FTSE 100 to beat small retreat after mining surge
FTSE 100 futures are pointing to a small retreat on Thursday as markets continue to digest comments from central bank leaders on both sides of the Atlantic.
The London equity benchmark has been called 10 points lower, a day after climbing 27 points to close at 9,250.43 as miners led a late charge on the back of a spike in copper prices.
The pound also fell after Bank of England governor Andrew Bailey said consumers are "being quite cautious" and holding back on spending, with the monetary policy committee still seeing a "further journey down" for interest rates as long as inflation cools.
Overnight, Wall Street was in reverse gear, with the Dow Jones receding almost 0.4%, while the S&P 500 and Nasdaq dropped 0.3%.
Asian markets are mixed-to-flat this morning with the Nikkei and Hang Seng up only slightly and other indices flattish.