- FTSE 100 declines 177 points to 10,195
- 10-year gilt yield rises 0.155 to 5.147%
- Brent crude tops $107/bbl
- Gold falls 1.4% on inflation jitters
5.30pm: In the red
London stocks pulled back amid renewed investor fears over a potential prolonged closure of the Strait of Hormuz, with the FTSE 100 shedding 177 points to finish the week at 10,195.
“A sea of red greeted stock investors on the last day of the week as the oil price is on track for a weekly gain of over 5% and European gas prices hit a five-week high,” IG chief technical analyst Axel Rudolph said.
“Heightened concerns of a prolonged shut down of the Strait of Hormuz following President Trump's blasé comments on the matter also pushed the US 10-year Treasury yield to a one-year high at 4.57%.”
2.52pm: Wall of red on Wall Street
UK blue-chips found little support from the US as Wall Street opened to a sea of red. Tech stocks were at the centre of the wobble on Friday, with traders not exactly hitting the panic button but certainly taking more than a hint of profit after a blistering run.
The Nasdaq opened down more than 500 points, or 2%, as oil-driven inflation fears pushed Treasury yields higher and hammered the valuations that had been bid up so aggressively in recent weeks. Semiconductor stocks took the worst of it, with Nvidia off more than 2% and both Micron and Applied Materials shedding roughly 3%.
Adam Crisafulli of Vital Knowledge told CNBC the technology sector had witnessed "an extremely unsustainable move in recent weeks and remains vulnerable to profit taking regardless of the headlines."
The pullback came after a steep stretch that had pushed the Dow back above 50,000 and the S&P 500 above 7,500 for the first time on Thursday.
The Trump-Xi summit added to the sour mood, with the few concrete outcomes, including Boeing orders, described as underwhelming. Entering Friday, the Nasdaq and S&P 500 had been tracking a seventh consecutive weekly advance, so perhaps a breather was overdue.
1.30pm: UK blue-chips lurch lower
The FTSE 100 lurched lower on Friday, posting a record 200-point loss as inflation fears and the fallout from the Trump-Xi summit in Beijing rippled through global markets.
US stock futures retreated sharply from record highs after the two-day US-China summit struck a business-friendly tone, delivering new deals for Boeing and Nvidia, but failed to deliver the hoped-for progress on Iran.
Markets had been betting that China would use its influence with Tehran to help end the Middle East conflict, and the lack of a breakthrough stoked fresh concerns about the war's inflationary impact.
Oil futures rose more than 2%, with Brent crude topping $108 a barrel, while benchmark 10-year US Treasury yields climbed further above 4.5% amid a global bond sell-off.
The combination of sticky inflation, elevated energy prices and geopolitical uncertainty left investors in no mood to hold risk heading into the weekend.
11.58am: Bitter-sweet bid
Once again, it seems the UK market is incapable of properly valuing its own businesses. Exhibit one for the prosecution: Tate & Lyle. The £2.7 billion bid approach from Ingredion, the US ingredients group, tabled at 615p per share, lays bare the mismatch between the price ascribed by the London market and the value recognised by those who actually know the industry.
Deutsche Bank lifted its target to 595p from 460p, with analyst Damian McNeela saying the bank had "long argued that Tate has been mis-priced" and was not surprised by the bid.
The two companies are now in negotiations, with Ingredion given until 11 June to make a firm offer under City rules.
DB noted that Tate's standalone case had been held back by lacklustre organic growth and a challenging market backdrop, leaving limited scope for a re-rating on its own merits.
The proposed bid values Tate at 15.1 times price-to-earnings on Deutsche Bank's 2026 estimates, which the broker said brings the valuation much closer to where peers trade. Another British asset, it seems, heading for the departure lounge.
11am: Bonds in focus at G7 meeting
Global bond markets are flashing warning signs ahead of next week's G7 finance ministers meeting in Paris, with yields rising sharply and simultaneously across Japan, the United States and the United Kingdom.
According to Reuters, Japanese Finance Minister Satsuki Katayama said on Friday that the bond market turbulence was firmly on the G7 agenda. "We've seen bond yields rise across all three major markets," she told reporters. "These moves appear to be reinforcing each other across the major markets. How to assess this situation is likely to be a topic of discussion at the G7 finance meetings."
Japan's benchmark 10-year government bond yield is nearing a three-decade high above 2.66%, driven by mounting inflation fears and fiscal concerns. In the UK, the 10-year gilt yield has climbed to 5.114%, rattled by domestic political turmoil and rising inflationary pressure. US Treasuries are under similar strain, with markets now pricing a roughly 45% probability of a Federal Reserve rate hike - double the level of just days ago.
The synchronised nature of the selloff is what concerns policymakers most, with moves in one market appearing to amplify pressure in others. G7 finance chiefs and central bank governors meet in Paris on Monday and Tuesday.
10.15am: Utilities take a drubbing
The FTSE 100 has extended its losses mid-morning on a combination of factors, including the threat to Prime Minister Keir Starmer's position and rising global inflation fears. The index is now 146 points lower at 10,227. The government's 10-year gilt is now 0.145 points higher at 5.137%.
London's blue-chip index is now 141 points down at 10,231.48. Miners Fresnillo, Antofagasta and Anglo American continue to lead the loser board, joined now by utilities National Grid PLC (LSE:NG.), United Utilities Group PLC (LSE:UU.), Severn Trent PLC (LSE:SVT) and SSE PLC (LSE:SSE) - all down 4-5%.
Rising bond yields and renewed interest-rate fears are hitting defensive, income-focused shares, and utilities are especially sensitive to that. They are often treated by investors as bond proxies because of their stable cash flows and dividend yields. When government bond yields rise sharply, those dividend streams become relatively less attractive
9.45am: Pound under pressure
Along with equities and gilts, the pound has also come under pressure due to the uncertain political situation. Saxo Markets' Neil Wilson notes that it has slid as low as $1.333 where it’s at a 5-week low, though the dollar side is driving a chunk of the price action as the dollar is firmly bid across the board.
"Nevertheless, the pound also hit its weakest against the euro since 8 April, so we can definitely see that the politics is hammering sentiment towards sterling," Wilson said. Political uncertainty and fiscal risks are adding pressure to sterling, though he believes it won’t fall as fast as it might due to the carry from the yield differential.
The 10-year gilt yield is now up 0.131 points at 5.123%. The FTSE 100 has fallen 127 points to 10,246.09.
9am: Not just UK gilts
UK markets are navigating a difficult combination of domestic political turmoil and global monetary pressure on Friday, with gilt yields rising sharply after Greater Manchester Mayor Andy Burnham confirmed he plans to stand in the Makerfield by-election, a move widely seen as the first step toward a Labour leadership challenge. The benchmark 10-year gilt yield is up 0.119 to 5.111%.
The bond market jitters are not confined to the UK. Richard Hunter, head of markets at interactive investor, says the warning signs are flashing globally. "It is the bond market where the alarm bells are beginning to ring, while the US equity markets continue to test fresh record highs," he said.
Hunter points to yields at or around 5%, with the probability of a US interest rate hike having spiked to around 45% this week - double the level of just a few days ago. Two hotter-than-expected inflation prints, a resilient US consumer and soft Treasury auctions are all pointing in the same direction: an economy that may need tightening rather than the easing markets had been counting on.
The FTSE 100 is now 83 points down at 10,289.62.
8.15am: Shaky start for equities and gilts
The FTSE 100 tumbled at the open, and gilt yields rose after Greater Manchester Mayor Andy Burnham said he would plan to stand in the Makerfield by-election, which would set him on course to challenge Prime Minister Keir Starmer in a leadership contest.
Shortly after the open, the blue-chip index was down 80 points at 10,293.35. The benchmark 10-year gilt rose 0.122 to 5.114%.
Miners including Fresnillo PLC (LSE:FRES), Antofagasta PLC (LSE:ANTO), Anglo American PLC (LSE:AAL) and Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF, FRA:6E2) led the decline on the FTSE 100, shedding between 3.3% and 5.2% as metals prices came under pressure. Gold has eased back 1.4% to $4,586.42 an ounce on rising inflation fears.
On the upside, 3i Group PLC (LSE:III) has jumped 3%, and Diageo PLC (LSE:DGE) is up 0.9%.
Oil majors BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) are also rising on a firmer oil price after US President Donald Trump said the US “doesn’t need the Strait of Hormuz open.” Brent crude is up 1.7% at 107.52.
7.45am: Bond markets on alert
With gilt yields near multi-year highs, the market will be watching closely as a leadership contest looks increasingly likely. The 10-year gilt yield rose above 5.1% this week, its highest since 2008, while 30-year borrowing costs briefly hit levels last seen in 1998. Goldman Sachs has warned that rising yields and weaker growth could wipe around £12 billion from Chancellor Rachel Reeves' fiscal headroom.
"For gilt markets, there’s been a focus on Burnham’s candidacy, in part as he said last year that the UK shouldn’t be 'in hock to the bond markets'," Deutsche Bank's Jim Reid said. "Moreover, Burnham suggested last week that defence spending could be considered outside the fiscal rules, which added to speculation about more gilt issuance under a Burnham premiership."
Reid noted that the Burnham news came out after gilt markets had closed yesterday, but the pound weakened sharply in response, ending the day 0.89% lower against the US dollar, making it the worst-performing G10 currency yesterday. And this morning it’s down a further 0.22% to $1.3373.
7.20am: FTSE 100 called lower as political drama builds
London is set for a rough open, with the FTSE 100 called down 87 points after closing 47 points higher at 10,372 on Thursday. The domestic political drama is showing no signs of letting up.
The latest twist is Andy Burnham. As Deutsche Bank's Jim Reid puts it: "The last 24 hours have brought many headlines, but the biggest is that Greater Manchester's Mayor Andy Burnham is seeking to return to Parliament. He now has a path to do so, because an MP in the region announced he'd be standing down to trigger a by-election, which Burnham has said he'll try to stand in. So if he's successful and becomes an MP, that would mean he could challenge for the party leadership to become Prime Minister."
That follows a turbulent Thursday in which Health Secretary Wes Streeting resigned from cabinet and called on Starmer to facilitate a leadership contest with "the best possible field of candidates," telling the Prime Minister directly: "It is now clear that you will not lead the Labour party into the next general election."
The picture was brighter overnight, as US stocks powered higher, with the Dow, S&P 500 and Nasdaq all gaining around 0.8-0.9%, the latter hitting a fresh record as AI enthusiasm roared back into the market.
Asian markets are mostly lower this morning. Tokyo's Nikkei has fallen 2.5% on inflation fears and rising rate expectations, while Hong Kong's Hang Seng is down 2% and Shanghai has slipped 1.3%. Seoul's Kospi has taken the biggest hit, down over 6% as foreign investors dump technology stocks. Sydney's ASX 200 ended marginally lower.