- FTSE 100 down 4 points at 10,265
- UK gilts near recent highs amidst possible Starmer exit
- Intertek received higher offer from private equity suitor
- Vodafone, Imperial Brands, Wickes report results
5.15pm: Stocks little changed
The FTSE 100 ended the day almost flat, down 4 points at 10,265, as the pound dropped amid political turmoil.
“The pound pulls back from a two-month high as UK political uncertainty regarding its prime minister and stalled US-Iran peace talks weigh on sentiment, while rising UK yields - to multi-decade highs -, surging oil prices and expectations for Bank of England rate hikes add pressure,” IG chief technical analyst Axel Rudolph said.
4.18pm: FTSE outperforming despite political turmoil
The Footsie has trimmed losses slightly in the past hour.
As a result, the London index's 0.3% is further outperforming mainland European stocks, with Germany’s DAX down 1.6%, while French, Italian and Spanish benchmarks are all down over 1.4-1.6%.
The Euro Stoxx 600 is down 1.06%, with UK names some of the biggest fallers, including Vodafone Group, Ocado and Wise.
Chemicals group Clariant, reinsurer Munich Re, construction company Hochtief and online fashion retailer Zalando were also among the weakest performers, while technology investor Prosus, chip equipment maker ASM International and Siemens Energy fell heavily too.
What seems to be helping the London index are that seven of the top 10 are in green or near flat. The top 20 includes 3-5% gains for tobacco giants Imperial and BAT, around 1% for oil majors Shell and BP, 1.5-2.4% for drugmakers AstraZeneca and GSK, as well as 6% for Compass.
3.40pm: Flutter and Asos in broker microscope
Flutter Entertainment's guidance looks too good to be true, despite recent downgrades.
So suggests Citi, which says the owner of Paddy Power and Betfair faces a near-impossible effort to meet market expectations in the second half.
Flutter has guided for 77% of its full-year US adjusted EBITDA to be generated in the second half of 2026. Based on the midpoint of the guidance range, $970 million, this implies second-half EBITDA of about $747 million.
Citi said that figure remained materially above its own forecasts and would require a significant acceleration in profitability.
Elsewhere, Deutsche Bank has raised its price target on ASOS after the sale of its Lichfield distribution centre to Marks and Spencer for a net £66 million.
Analysts also flagged that ASOS's large mothballed logistics facility in Atlanta, USA remains a potential source of further upside through a similar disposal.
2.49pm: US stocks open lower
Wall Street has joined in the selling party.
The Dow Jones has opened 362 points in the red, down 0.7%, while the S&P 500 and Nasdaq are down 0.5% and 0.6%.
Biggest fallers on the Dow are Salesforce, Goldman Sachs, Caterpillar, Amazon, Microsoft and JPMorgan Chase - all down 1.8%-1.2%.
Nvidia and Visa are the only ones up more than 1%.
On the S&P, biggest fallers are Qualcomm, Dell, West Pharmaceutical, SanDisk and Teradyne, down 4.9-3.6%. Zebra Technologies is the top riser, up 15.8%.
2pm: CPI thoughts
April’s CPI report was "not hot enough to panic markets, but not soft enough to give the Fed much room to cut," says Lale Akoner, market analyst at eToro.
"Sticky services inflation, and higher airfares keep the ‘last mile’ inflation problem alive.
"For retail investors, the key takeaway is rates may stay higher for longer. That supports cash-like returns and short-term bonds, but can pressure rate-sensitive areas such as small caps, unprofitable tech, and housing-linked stocks. The two-year Treasury yield is the market’s Fed barometer, and a move higher signals investors are trimming hopes for near-term cuts.
"Equities can still look through one CPI print, especially if earnings remain strong. But the bar for a dovish Fed pivot is higher. Retail investors may want to avoid chasing rate-cut trades too aggressively and focus on quality companies with pricing power, strong balance sheets, and resilient margins."
George Brown, economist at Schroders, says: "US inflation is close to peaking, but that does not mean relief is imminent. With oil prices still unpredictable, the danger is that a temporary energy shock morphs into something more persistent.
"With rate cuts now unlikely in 2026, the policy debate has shifted to whether the Fed can afford to sit tight or is ultimately pushed into tightening. Fed Chair nominee Kevin Warsh may advocate looking through a one-off energy shock, but other parts of the Fed appear less relaxed about the risks.
"If growth remains as resilient as we expect and second round effects emerge, the Fed could find itself behind the curve, requiring a more forceful response later down the line. Our base case is that the Fed talks tough but ultimately holds rates steady, before returning to easing policy in 2027."
Garry White at Charles Stanley says: "US inflation coming in hotter than expected reinforces concerns that price pressures are becoming more entrenched.
"This strengthens the 'higher-for-longer' narrative for US interest rates, suggesting that underlying-inflation momentum remains sticky and that second-round effects are increasingly taking hold.
"For the Federal Reserve, such an outcome is likely to erode confidence that inflation is sustainably converging toward target, leaving policymakers reluctant to signal near-term rate cuts and instead inclined to maintain a restrictive policy stance for longer."
1.37pm: US CPI rises to three-year high
US inflation last month was the highest in three years, due to rising energy, housing and food prices.
The US consumer price index was up 3.8% year on year in April, up from 3.26% the month before.
Month-on-month, CPI increased 0.6%, easing from the 0.9% monthly CPI reading in March.
Core CPI, which exclude food and energy, rose to 2.8% from 2.6%, while monthly core CPI climbed to 0.4%, the most in over a year, and overshooting market expectations of a 0.3% increase.
1.25pm: Sensitive markets
Financial markets are "highly sensitive" today, ahead of the US CPI report due shortly, says market analyst Kathleen Brooks XTB.
"There are multiple triggers of volatility for investors to keep an eye on including the tentative nature of the Iran/ US ceasefire and the political turmoil in the UK," she says.
After Kier Starmer stood up to his detractors from within the Labour Party and promised to fight on, Brooks says "it turns out that the likes of Andy Burnham are in fact very aware of the UK bond market, and today’s large spike in bond yields may have put them off making a move to oust the Prime Minister in the short term".
Gilt yields, while backing away from earlier highs are still higher than yesterday, with the UK's borrowing costs the highest of any G7 member.
"Until a challenge from the left of the Labour party is eradicated, or the government embarks on growth-positive economic policy, we do not see UK bond yields substantially falling from here," says Brooks.
"Ultimately, it could be the bond market that saves Starmer, as it’s unlikely bond traders would trust anyone else at this stage."
US CPI is released at 1.30pm UK time, with expectations for a rise to 3.7% YoY for April, up from 3.3% in March.
12.22pm: FTSE wallowing, US futures in red
The FTSE 100 has been largely unmoved at around a 40-45 point deficit since the end of the first hour's trading.
Vodafone is leading the fallers, down 5.4% after a mixed update, where a return to German growth was offset by a pause to share buybacks to take full control of its UK joint venture.
Lenders are also a big weight on the index, with Lloyds, Barclays, NatWest, Standard Chartered, Lion Finance (the former Bank of Georgia that was promoted to the Footsie in March) and HSBC down from 4% for the former down to 1.8% for the latter.
Other finance stocks, retailers, housebuilders and defence stocks are also among the fallers.
Looking across the sea, European shares are deeper in the red, while US futures are down too.
Nasdaq futures are down 0.9%, while those for the S&P 500 are sitting 0.4% lower and Dow Jones futures are just below flat.
Shares in GameStop are down over 4% after its bid for eBay was rejected as “neither credible nor attractive”.
US West Texas Intermediate oil futures are up almost 3% to $101.35 per barrel.
11.49am: Starmer's resilience keeps markets from panicking
As PM Keir Starmer has "demonstrated resilience under pressure before", markets "remain watchful rather than panicked", says market analyst Nikos Tzabouras at Tradu.com.
"But with political and economic pressures converging, the window for an orderly resolution may be narrowing."
As others have said, markets are increasingly concerned that a change in leadership could lead to a loosening of fiscal rules.
"This comes as a spike in energy prices pushes inflation higher, adding to the strain on already stretched households. It also puts the Bank of England on a difficult path towards raising interest rates, which could stifle growth in an economy that is already fragile.
"Markets show little tolerance for any costly increase in government borrowing, which could hurt both the bond market and the pound, undermining investor confidence at a particularly vulnerable moment."
10.53am: Gilts soften as Starmer vows to fight on
Gilt yields have dropped a little after Keir Starmer has told his Cabinet he is not resigning.
According to 10 Downing Street, he said: "As I said yesterday, I take responsibility for these election results and I take responsibility for delivering the change we promised."
He noted that the Labour party "has a process for challenging a leader and that has not been triggered".
"The country expects us to get on with governing. That is what I am doing and what we must do as a cabinet."
In a note published earlier this morning, UBS predicted that gilts will still be under pressure (leading to elevated yields) from lingering political uncertainty for the rest of the year.
"We were hesitant to go long gilts prior to the local election and remain hesitant for the time being," rates strategists said, warning that growing concerns over public finances could push 10-year gilt yields another 0.25-0.5 percentage points higher.
The bank said it expects investors to continue demanding higher returns for holding longer-dated UK debt, particularly as political developments keep markets on edge.
UBS expects the Bank of England to leave interest rates unchanged for the rest of 2026, arguing there is limited room for the government to loosen fiscal rules significantly.
The Swiss bank added that rising oil prices also remain a key risk for gilts, warning that a further jump in energy costs alongside fiscal concerns could trigger a sharper sell-off in the bond market.
But UBS stuck with its prediction that 10-year gilt yields will end the year around 4.75%.
10.25am: Trustpilot hit by downgrade, Frontier Developments jumps
After Wickes, Trustpilot is the biggest faller on the FTSE 350.
Morgan Stanley has downgraded the reviews platform from 'overweight' to 'equal-weight', arguing that a 60% share price rally this year has left the risk-reward more balanced.
The bank's analysts raised their price target modestly to 275p from 265p, though.
Among other movers outside the blue-chips, computer games group Frontier Developments has shot up 19% after upgrading full-year revenue and profit guidance. This is driven by the success of Jurassic World Evolution 3 and stronger sales across its wider games portfolio.
9.49am: Analysts like Greggs chicken rolls and Tenerife opening
Greggs shares have heated up 5.5% this morning.
With the FTSE 250 group saying that improved trading has been supported by menu development, such as the new chicken roll launched in April, Jefferies analyst Andrew Wade said: "we suspect this has been a key contributor to the improved LFL trend".
It was "a solid update", was Wade's overall view, with LFLs improving, strong profit extraction, and guidance reiterated. "That being said, our analysis suggests price is contributing circa 6%, such that volumes remain in negative territory."
Clive Black at Shore Capital says it feels like same-store volumes are stabilising, "which is a relief", with Greggs is "in the midst of quite a material infrastructure investment, which is an enormous capital expense, but at least commissioning is in tow".
He reiterated a 'hold' rating, saying: "If trade can remain sound as the peak capital expenditure is worked through, much stronger cash flow metrics may be ahead, which could make the stock a lot more interesting in due course, but that is for FY27 and thereafter."
Black is particuarly taken by the announcement that Greggs is opening a store in Tenerife South Airport, "where the Geordies, amongst others from the home nations, can bring the aroma of a steak bake to their favourite Ryanair flights.
"We shall observe with interest this potential new avenue for expansion, particularly how non-Brits take to the assortment."
9.17am: Intertek leads risers
Gains for Intertek on the back of results, tobacco companies and oil majors Shell and BP have helped cut the FTSE's losses.
Testing, inspection and certification group Intertek is top of the leaderboard, up 6.8% after Swedish private equity group EQT submitted an improved and "final" bid worth up to £9.4 billion.
EQT is offering £60 per share in cash, up from a third increased bid of £58 per share last week, which Intertek's board rejected, plus the 2025 full-year final dividend of up to 107.7p per share.
Tobacco company Imperial Brands also reported interim results, saying it expects low-single-digit growth in underlying revenue and that underlying operating profit will be slightly ahead of last year.
Guidance for full year at least high-single digit growth in earnings per share was reiterated.
Market analyst Derren Nathan at Hargreaves Lansdown says: "With full-year guidance intact, Imperial is setting out its stall as a strong defensive investment, and despite a note of caution, it has seen no material business impact from this year’s tumultuous geopolitical events."
Aftert the shares fell in early trading before picking up in the past half-hour, he adds: "The 5.6% forward yield and ‘evergreen’ buyback looks to be on firm ground, but a re-rating in recent years also means Imperial must now compete with companies from less controversial industries for the attention of income investors. With some work left to do to hit full-year guidance some weakness in the shares was to be expected in a nervous market."
8.42am: European markets down, but UK politics in focus
Undermining the UK political narrative for the FTSE's 0.7% descent slightly, wider European markets are also firmly in the red in opening trades.
In Frankfurt and Milan, the DAX and MIB are down over 1.1%, while the CAC 40 and IBEX 35 have dropped 0.8% in Paris and Madrid.
Nevertheless, London's financial commentariat are focusing on the UK.
"It now appears inevitable that the PM will step down either now, or set a timetable to do so in the coming months," says market analyst Neil Wilson at Saxo, expecting volatility in gilts and sterling to continue.
"We could see a blowout in longer-dated gilts if this turns into a dogfight – political, fiscal and inflationary risks will rise.
"Markets tend to dislike a lack of certainty over who runs a government; the fiscal position is already fragile and likely to become worse should a left-leaning ticket prioritise spending; and that this makes inflation stickier."
Sterling is also down versus the US dollar at 1.3540 in early trading. Wilson says a move back to 1.34 "seems very possible in the near-term and longer-term we could easily retest 1.30".
Also weighing on bank shares, Derren Nathan at HL noted that Barclaycard card spending data showed a first decline since 2024, with a 0.1% decline year-on-year.
8.27am: Bond market watching Downing Street
Gilt yields have spiked again this morning, amidst reports of a fracturing in support for the Prime Minister ahead of a potentially crucial Cabinet meeting this morning.
The FT reports that Keir Starmer is "weighing" if his premiership can be saved ahead of the meeting, with at least two, possibly three Cabinet members among those telling PM Keir Starmer to set out a timetable for his departure.
Home secretary Shabana Mahmood and foreign sec Yvette Cooper have both urged him to set an exit plan, various papers report.
At least two other members of his Cabinet have discussed with the PM how they should take a “responsible, dignified, orderly” approach to what might follow, while several others have urged him to fight on.
The UK 30-year bond yield (ie government borrowing costs) rose to 5.779% this morning, up from 5.58% at the start of the week and not far off the highest since 1998 seen last week. 10-year gilt yields have topped 5.1%, up from 4.97% at the start of the week and below 4.9% on Friday. The 2yr is up to 4.579% too.
Rising gilt yields tend to pressure the UK stock market because higher government borrowing costs push up interest rate expectations, increase financing costs for companies and make lower-risk bonds more attractive relative to equities. Higher yields can also reduce the present value of future corporate earnings, which weighs on growth stocks.
8.15am: Banks lead opening falls
The FTSE 100 has plunged 111 points to 10,159 in opening trades.
Banks are leading the fall, with NatWest, Lloyds and Barclays all down at least 4%.
Vodafone is down 3.1% after reporting results.
Lion Finance, Standard Life, St James's Place and Prudential are other financials in the red, down 2-3%.
7.58am: Wickes hit by weather
Wickes Group reported like-for-like sales just below flat for the first 17 weeks of 2026 as weaker outdoor DIY demand caused by poor weather was offset by strength in its Design & Installation business and TradePro offering.
The home improvement retailer said it remained comfortable with consensus expectations for adjusted pre-tax profit in 2026.
Group revenues rose 1.3% to £537 million in the period from the start of January to 25 April, while like-for-like revenue was down 0.1%.
7.41am: Vodafone results
Vodafone reported total revenue up 8% to €40.5 billion for the year to March, with organic service revenue growth of 5.4%.
In the fourth quarter, organic service revenue grew 5.1%, beating the average analyst forecast of 4.9%.
Germany, Vodafone’s largest market, saw organic service revenue decline 0.2% for the year, though fourth-quarter growth improved to 1.3%.
Operating profits swung to €2.8 billion from a loss of €0.4 billion a year earlier, and the full-year dividend was upped 2.5%.
7.26am: BRC retail sales
UK retail sales fell 3.4% in April compared to a year earlier on a like-for-like basis, down from a 3.1% gain in March and below the consensus forecast of 0.8%.
These are the industry's own figures, from the British Retail Consortium, which are not seasonally adjusted, so Easter came at the start of April this year but saw a larger boost from a later Easter last year.
Total sales fell 3.0% year-on-year, down from 3.6% in March.
Food sales decreased 2.5% and non-food sales decreased 3.3%.
Helen Dickinson, chief executive at the BRC, said: "April’s sales fall was largely driven by the Easter shift, with food hit hardest. But weak consumer confidence also played a role as fears about the Middle East conflict driving up living costs led shoppers to rein in.
"Big-ticket purchases fell, with the recent recovery in furniture losing steam, and uncertainty around summer holidays hitting discretionary spend. With the World Cup coming, retailers hope it will provide a lift, and early signs show demand for TVs and sound systems picking up."
7.17am: FTSE 100 called sharply lower
The FTSE 100 and other European markets are expected to fall sharply at the open on Tuesday as prospects for peace in the Middle East have not significantly brightened and UK political worries continue to keep government bond yields higher.
London's blue-chip index is down 64 points on the futures market, after the week started with a gain of just over 36 points to close at 10,269.43.
US stocks finished Monday with modest gains, the Dow Jones and S&P 500 adding 0.2% and the Nasdaq inching 0.1% higher.
This morning, oil prices have moved little from where they started the week, while Asian stocks are mixed, with the Nikkei up 0.4% in Tokyo, Hong Kong's Hang Send flat and India's Sensex down 1.1%.
South Korea's Kospi finished down 2.35%, having been down over 5% at one point after a senior government official proposed a "national dividend" to share in excess AI industry profits.
On the Iran situation, Donald Trump said the ceasefire was on "massive life support" and called Iran’s latest offer "a piece of garbage", after Tehran called for a lifting of the US blockade, sanctions relief and a degree of control over the Strait of Hormuz.
President Trump also said he was considering reviving naval escorts for ships through the Strait of Hormuz, aka 'Project Freedom', and said he was supportive of a gasoline tax holiday.
Deutsche Bank macro analyst Jim Reid says: "With the sides appearing no closer to resolving their negotiation deadlock, Brent crude prices are +0.70% higher at $104.94/bbl this morning after a +2.88% gain yesterday.
"Markets are also pricing rising chances of lasting disruption, with 6-month Brent futures up +2.54% to $89.50/bbl yesterday."
In UK politics, the FT and Guardian both report that at least two Cabinet members are among those telling PM Keir Starmer to set out a timetable for his departure, with more than 70 Labour MPs publicly calling for him to stand down.
Vodafone, Imperial Brands, Intertek, Greggs and Wickes are among those London stocks reporting this morning.