- FTSE 100 down 144 points to 10,219
- UK bond prices rise to decade highs
- HSBC falls on profits miss
- Vodafone takes full ownership of UK mobile JV
5.30pm: In the red
London stocks were under pressure on Tuesday, finishing the session down 144 points at 10,219. Across the pond, the Nasdaq eyed a new record as oil prices pulled back.
“Following five straight weeks of gains, US stock indices resume their ascent as bargain hunters enter the fray after Monday's sell-off", IG chief technical analyst Axel Rudolph said.
“Crude prices falling by over 3% and US exports hitting a record high in March also provided a positive tailwind which extended to precious metals and cryptocurrencies such as Bitcoin, which hit a 3-month high above $81,000."
4.05pm: Banks, insurers and retailers all weigh
The FTSE 100 was down almost 200 points but seems to be easing.
HSBC has been a big weight on the index all day, with the rest of the banking sector dragged down too. NatWest has lost 3.6%, Lloyds 3.4%, Barclays 3.3% and Stan Chart 3.1%.
Insurers and asset managers were in the red, with Legal & General down 3.41% and Standard Life Aberdeen off 2.68%.
Retailers and consumer-facing stocks also struggled. Marks & Spencer has dropped 4.75%, JD Sports 3% and Kingfisher 2.8%, while Tesco was down more than 2.5%.
3.38pm: Gilt-y feelings
Some thoughts on the new 27-year high in UK government borrowing costs.
"Gilt yields are rising because markets are starting to price in a more fragile UK outlook than headline data suggests," says Lale Akoner, global market analyst at eToro.
"The combination of political uncertainty, energy sensitivity and fiscal pressure is forcing investors to reassess how much risk they are willing to carry and that adjustment is happening quickly ahead of local elections.
"Investors are responding by demanding a higher premium to hold UK debt, particularly at the long end, where sensitivity to political and economic risks is greatest. At the same time, demand dynamics have become less stable, amplifying moves in yields.
"If uncertainty persists, upward pressure on yields is likely to remain, with broader implications for borrowing costs and financial conditions across the economy."
As well as added uncertainty, the bond market is worried about the risks to the economy from a change of leadership.
Second, says economist Thomas Pugh at RSM, a messy leadership contest could open a "Pandora’s box of potential tax hikes" and any replacement for Starmer "is likely to want to spend more".
Current front runners Angela Raynor and Andy Burnham have both indicated that they would favour a more interventionist approach to the economy, and would like to see government spending rise further.
It is this that has raised red flags among gilt investors.
"Granted, more debt funded government spending would, in theory, provide a near-term boost to growth," says Pugh, but also comes with the risk of boosting inflation, which in turn would make the Bank of England more likely to hike interest rates.
"Admittedly, even if Sir Keir Starmer stays on as Prime Minister, the government will face greater pressure to support households and businesses with energy bills if there is no permanent solution to the conflict in the Middle East soon.
"This suggests more near-term spending and higher gilt yields in the coming months, regardless of who is in charge.
"Ultimately, there is a growing risk that the UK lurches from an energy crisis straight into a political crisis, which results in another bout of uncertainty, and even higher borrowing costs."
2.55pm: Wall Street opens higher, FTSE sinks lower
US stocks have opened higher, led by Intel's 11% gain and other tech stocks.
The Nasdsq has marched 0.9% higher, while the S&P 500 has gained 0.7% and the Dow 0.4%.
Chipmakers and hardware groups were among the strongest movers, with Intel joined by Micron, Western Digital, Seagate all up over 6%, closely followed by Lam Research, ARM, ASML and AMD to top the Nasdaq 100 risers.
The FTSE meanwhile, has continued to head lower, with only Shell and Glencore in the green of the index's 10 largest companies.
1.58pm: Bonds in focus
UK gilt yields - aka government borrowing costs - are gaining more attention.
Not surprising when the UK 30-year bond yield has risen to above 5.8% for the first time since the 1990s.
Rising oil and gas prices, fueling inflation worries and therefore pushing rate expectations upwards, and speculation over the future of Keir Starmer are behind the rise in yields, analysts have said.
The yield on the 30yr gilt has topped the 27-year high set last September.
Bond yields, like equity dividend yields, rise when prices fall.
1.26pm: Oil prices ease, as Hegseth plays down Strait fighting
Oil prices have eased further, as US defence officials struck a cautious tone on the Strait of Hormuz, saying Iranian actions remain below the threshold for a wider conflict, despite continued harassment of shipping.
In a press conference just now, US defence secretary Pete Hegseth insisted the ceasefire “is not over”, but said current activity is “low level”.
Joint chiefs chair Dan Caine said Iran has attacked vessels nine times and seized two ships since the ceasefire, with around 22,500 mariners still unable to transit the Strait.
Hegseth says “hundreds of ships” are waiting to pass through, with US forces providing protection, warning Iran would face “overwhelming firepower” if it escalates further.
Brent crude is now below $112 a barrel, down from $114 yesterday and $120+ last week.
Shell shares are up 0.5%, while BP's are down 0.2%.
12.14pm: FTSE lagging after long weekend
Just after midday, the FTSE 100 is over 120 points in the red, with HSBC and other lenders continuing to be a heavy weight around the index's neck.
HSBC is down 5.5%, with Lloyds and Stan Chart both down over 2.5%, and NatWest and Barclays down either side of 1.5%.
There are nine of the Footsie's 20 largest companies down by at least 1%, with only seven of the 30 largest companies in green.
Other sizeable fallers are in consumer-centred sectors such as travel, leisure and discretionary retail, with Entain, Haleon, IHG, JD Sports, Unilever, M&S, Reckitt, Coca-Cola EUroppacific, Burberry and Kingsisher all down more than 2%.
Across the Channel, mainlaind European stocks are firmly in green.
"Despite this," says market analyst David Morrison at Trade Nation, "they only managed to make back around half of their thumping losses from yesterday.
"Investors rushed to cut their exposure to European equities due to the sharp escalation in hostilities between the US and Iran yesterday."
After the US Navy fired on Iranian vessels as they escorted shipping through the Strait of Hormuz, Iran declared this a breach of the ceasefire agreement.
He says the FTSE has dropped "as traders factored in yesterday’s weakness".
US futures are positive, with the tech-centred Nasdaq in the lead, up 0.5%. Futures for the S&P 500 and Dow Jones are up 0.3% and 0.2%.
Palantir Technologies shares are down more than 3% premarket, despite some glowing reports about last night's earnings.
Apple is also a focus after reports about executives touring a Samsung fabrication plant and hold separate talks with Intel about chipmaking services. Intel shares are up 3.6%.
11.51am: Big small cap movers
Some movers from down the smaller end of the market.
Autins Group, the acoustic and thermal insulation manufacturer, jumped almost 30% earlier, but has eased off a little, after the AIM-listed outfit reported its first net profit in nine years alongside a wave of new contract wins that underpin multi-year revenue growth.
Hydrogen Utopia climbed 18.5% after saying it is moving into the defence market with Project Fortress Fuel, a proposed system designed to turn domestic waste plastic and end-of-life tyres into JP-8 military aviation fuel and baseload electricity.
Light Science Technologies has been lifted almost 18% after securing its first order as a supplier of Injectaclad, a fire-resistant graphite barrier system used in building cladding remediation.
Ethernity Networks, the AIM-listed semiconductor technology company, fell by a third after revealing a cash crisis that has forced its two senior managers onto part-time contracts.
Chrysalis Investments, an early backer of Klarna, Starling Bank, Wefox and Wise, has seen its shares fall 7% after reporting a sharp drop in net asset value and confirming a transition to a self-managed structure that will end its relationship with its external investment adviser. Its arrangement with external adviser Chrysalis Investment Partners will end by 20 August, and six months' notice has been served on its alternative investment fund manager, G10 Capital.
11.19am: HSBC takes hit from MFS collapse
As well as downgrading its economic outlook due to the Iran war, impairments at HSBC were driven by around a $400 billion fraud-related exposure for the UK corporate and institutional banking arm.
The latter loss is reported by the FT to have come via client Apollo lending to collapsed lender Market Financial Solutions (MFS).
This collapse amid fraud allegations also led to a £0.2 billion impairment that Barclays reported for this past quarter.
10.57am: EV tax would hit EV sales, says pro EV group
EV lobbyists are warning Rachel Reeves against her plans for a pay-per-mile tax on electric vehicles.
A group of trade bodies, renewables companies and EV charging businesses have written a letter to the Treasury saying the new EV excise duty risks hitting sales, which they say would end up negative all round.
In a worst-case scenario set out in the letter, HM Treasury could miss out on £4.8 billion in 2028 if drivers delay buying new EVs and also hold back from buying new petrol and diesel cars.
Plans were announced for a 3p-per-mile tax on EVs and 1.5p for plug-in hybrids in the Chancellor's last autumn Budget, designed to raise £1.1 billion in the first year after being introduced in April 2028 and rising to £1.9 billion by the end of the decade.
Similar levies in Iceland and New Zealand had triggered sharp declines in EV sales, the letter notes.
10.20am: London lagging due to catch-up or bonds?
The FTSE 100 is deep in the red, while other European markets are firmly in green, with the Frankfurt and Madrid benchmarks up 1%, and the Paris index up 0.6%.
A rise in gilt yields – possibly linked to reports of a Labour plot to oust Sir Keir Starmer – is a factor weighing on the London blue-chips.
(Also, London's early May public holiday was yesterday, when mainland European stocks fell, playing catch up after their May Day holidays at the end of last week.)
Backbenchers who won their seats in the last election are reported to be planning to call for Starmer’s resignation in an open letter following what is expected to be a disastrous set of local election results this Thursday.
Getting rid of the PM is bringing back memories for markets of the chaotic life under the previous government, says from deVere Group CEO Nigel Green.
"Markets have long memories, and in the UK gilt market that memory is dominated by Liz Truss,” he comments.
"The 2022 mini-Budget crisis is still the benchmark for what happens when fiscal credibility is questioned. Yields surged, long-dated gilts were hit hardest, and the Bank of England was forced into emergency action to stabilise the system.
"Investors are watching current political developments through that exact same lens.
"Any sign of instability around Prime Minister Keir Starmer or pressure on Chancellor Rachel Reeves immediately feeds into concerns about whether fiscal discipline could weaken."
9.41am: Oil prices ease as Gulf war of words continues
Oil prices have softened slightly this morning, though they remain as choppy as the water of Hormuz.
Brent has eased to $112.67 a barrel, down from above $114 in the early hours. It comes as a fire has broken out at UAE’s Fujairah, a strategically important oil hub.
The UAE has pointed the finger at Iran for last night's attack, but Tehran has not claimed responsibility.
It was not the result of a planned Iranian attack, an unnamed Iranian military official has said, instead blaming Washington.
"The Islamic Republic had no pre‑planned programme to attack the mentioned oil facilities, and what happened was the result of US military adventurism aimed at creating a passage for the illegal transit of ships through the restricted waterways of the Strait of Hormuz,” the official told Iran’s IRIB news agency.
"The US military must be held accountable for this. US officials must put an end to the improper practice of using force in the diplomatic process and stop military adventurism in this sensitive oil region, which affects the economies of countries around the world."
9.16am: HSBC's results pretty good were it not for Iran
HSBC's credit impairments "largely blotted the copybook for this quarter", says market analyst Richard Hunter at Interactive Investor,
He also says that "the lack of a return to the share buyback programme may also provide some disappointment".
HSBC joins its other UK banking peers in facing some impact from the US and Israel's war on Iran and Lebanon, though HSBC, along with Standard Chartered, has larger exposure to the region.
Hunter adds that other key metrics remained generally robust
Matt Britzman at Hargreaves Lansdown says the first-quarter "was better than the headline numbers suggest", though he noted that costs were higher than predicted as performance pay, inflation and technology spend all bit into profits.
The results included an upgraded full-year net interest income guidance, similar to that seen from peers last week.
This gives investors "some comfort that the income engine still has fuel in the tank", Brizman adds.
8.29am: Intertek boosted by upgrade
At the other end of the blue-chip scale this morning, Intertek has jumped over 7% after private equity firm EQT submitted an improved £58 per share cash proposal to acquire the company.
The Swedish firm's third approach values the testing and inspection group at a 54% premium to its closing price of £37.70 on 9 April, before the initial bid was made.
Intertek, which had also launched a strategic review, previously rejected a £54 per share proposal late last month.
8.14am: HSBC leads FTSE lower at open
The FTSE 100 has plunged lower in early trading, dropping 102 points to 10,267.
HSBC is a large part of the decline, with the index's largest company dropping 5.3% after its quarterly results.
Sector peers Lloyds Banking, Standard Chartered, Barclays and NatWest are all down over 2% too.
InterContinental Hotels, Haleon, Fresnillo and Unilver are also among the biggest fallers.
7.44am: Vodafone to take control of UK JV
Vodafone Group has agreed to buy out its partner in its UK mobile joint venture, VodafoneThree, for £4.3 billion, taking full ownership of the UK mobile and broadband operator less than a year after the joint venture was created.
The FTSE 100 telecoms group said it will use its existing cash resources to acquire the 49% stake held by Hong Kong's CK Hutchison through a share cancellation, valuing the combined business at £13.85 billion.
7.32am: HSBC profits miss target
HSBC Holdings has reported first-quarter pre-tax profit slightly below analyst expectations, due to a larger hit from expected credit losses linked to the war in the Gulf.
Credit impairment charges rose to $1.3 billion, up $0.4 billion from a year ago, driven by a $0.4 billion fraud-related exposure in the UK and a $0.3 billion increase in provisions linked to a weaker economic outlook following the onset of conflict in the Middle East. The first quarter last year had also seen higher-than-normal expected credit losses due to geopolitical tensions and higher trade tariffs.
7.17am: FTSE 100 to open just below flat
The FTSE 100 is predicted to open slightly lower as trading begins after the long weekend, with tensions ramped up in the Gulf and oil prices hovering only a little below recent highs.
The US and Iran traded threats over the Strait of Hormuz, while a missile and drone attack on the oil port of Fujairah in the UAE was reportedly intercepted.
London's blue-chip index has been called 5 points lower on Tuesday, after last week saw a loss of just under 15 points over the week to finish at 10,363.93.
Brent crude oil stands at roughly $113.50 a barrel, having fallen below $109 on Friday.
Yesterday, Washington announced it would escort ships through the Strait of Hormuz, before Iran warned it would retaliate.
Reports suggest what President Trump is calling 'Project Freedom' began on Monday, with US Central Command claiming two commercial tankers had managed to traverse the Strait.
"Iran then struck ships and key oil infrastructure in Fujairah, UAE – notably a terminal that allows exports bypassing the Strait," says market analyst Ipek Ozkardeskaya.
She says the pattern for oil prices now seems "familiar", with the $115–120 a barrel range "acting as strong resistance – above this level, the market shifts from pricing supply constraints to pricing demand destruction".
"That brings rising inflation expectations, more hawkish central bank expectations and higher yields — all of which were triggered yesterday. The US 2-year yield jumped near 4%, while the 30-year yield breached 5%. European 10-year benchmark yields also moved higher."
Also worth noting, Australia's central bank raised interest rates another 25 basis points to 4.35%, its third successive hike to take its cash rate back up to the peak last seen at the end of 2024.