- FTSE 100 pares losses. Down 25 at 10,764
- Miners drag on London stocks as copper and zinc prices fall amid a stronger dollar
- Brent crude holds near US$95 a barrel as renewed US-Iran tensions raise energy supply concerns
- Citibank fined £4.7 million by UK regulator over breaches involving Russia-related sanctions
2:35pm: Wall Street opens cautiously
London stocks remain lower as gilt yields hit 18-year highs, with miners and media shares among the biggest drags, while Wall Street opens cautiously.
The FTSE 100 was down around 0.6%, while the more domestically focused FTSE 250 was under greater pressure, having earlier fallen 0.8% to its lowest level since 4 August.
Industrial metal miners were among the main FTSE 100 drags, with copper and zinc pressured by a stronger dollar, while Rio Tinto and Glencore were lower. Media stocks were also weak, with WPP among the notable fallers.
Brent crude remained close to US$95 a barrel as renewed US-Iran hostilities heightened concerns over energy supplies and inflation, while gold and copper were weaker.
In company news, Citibank was fined £4.7 million by the UK's sanctions regulator over breaches involving Russia, with its London branch found to have processed 970 payments worth £19.7 million.
Wall Street has so far provided little relief, with US futures pointing to a cautious opening after Tuesday's falls, while investors continue to weigh elevated Treasury yields, oil prices and geopolitical risks.
1.00pm: FTSE 100 Remains under pressure
The FTSE 100 remained under pressure in afternoon trading, down around 0.6%, as surging gilt yields and renewed US-Iran tensions kept investors cautious.
The weakness was broad, with technology, investment and mining stocks among the sectors under pressure as UK borrowing costs approached 5.3% and copper prices fell.
Computacenter, Experian and Sage remained among the notable fallers, while energy stocks provided some support as Brent crude held near US$95 a barrel.
London’s mid-cap stocks fell to a near one-month low as UK gilt yields hit 18-year highs, driven by renewed inflation fears after fresh US-Iran strikes.
Miners weighed on the blue-chip index, while banks offered some support.
12:30pm: Hotelier upgraded
InterContinental Hotels Group was a standout riser, climbing around 2% after UBS upgraded the hotel group to 'buy' from 'neutral' and raised its price target to US$188 from US$157.65.
UBS says buy the dip on IHG as Hilton gap looks overdone.
The broker argued that IHG trades at a discount to Hilton despite its earnings track record, with potential upside from recoveries in China and the Middle East.
The hotel giant behind Holiday Inn and Crowne Plaza is up 2% at $59.10 as we head into the late afternoon session.
The broker's argument is simple: IHG shouldn't be cheaper than Hilton, but right now it is, trading at a 3% discount despite a track record that speaks for itself. Earnings have compounded at roughly 9% a year for a decade. A decade.
Add $8.5 billion (around £6.3 billion) returned to shareholders via buybacks and dividends, and this starts to look less like a laggard and more like a bargain hiding in plain sight.
UBS thinks the valuation gap closes as China and the Middle East recovery gather pace, both markets where IHG has real exposure and Hilton comparatively less.
Nothing else has really changed here. Same hotels, same rooms, same buyback machine.
11.30 am: Small companies underperform as selling broadens
Smaller UK companies bore the brunt of London’s sell-off as rising bond yields placed pressure on domestic, growth-oriented and rate-sensitive businesses.
The FTSE SmallCap index stood at 8,181.93, down 75.96 points or 0.92% from its previous close of 8,257.89.
The decline closely matched the 0.93% fall in the AIM All-Share. The AIM 100 performed even more poorly, dropping 1.15%, while the FTSE 250 lost 216.56 points, or 0.88%, to 24,304.73.
By comparison, the FTSE 100 was down 62.18 points, or 0.58%, at 10,727.10, confirming that smaller and mid-sized companies were under greater pressure than blue chips.
Recruitment company Robert Walters led the FTSE SmallCap fallers with a 5.1% decline, while microfinance provider ASA International (LSE:ASAI) lost 4.8% and mining-services company Capital Ltd fell 4.2%.
Building-products companies were also prominent among the losers. Eurocell and SIG dropped approximately 4% each, while radiator manufacturer Stelrad declined 3.9%. The weakness was consistent with investor concerns about the effects of elevated borrowing costs on construction and other domestically sensitive industries.
Among the mid-caps, Applied Nutrition fell 6.1%, Foresight Group dropped 4.5% and B&M European Value Retail declined 3.4%. Trustpilot and GB Group lost approximately 3.4% and 3.3%, respectively.
Advertising group WPP fell 3.2%, while copper producer Atalaya Mining declined by the same amount as the stronger dollar and rising US interest-rate expectations weighed on industrial metals.
Mining shares accounted for a sizeable proportion of the AIM fallers. Serabi Gold (AIM:SRB, TSX:SBI) dropped 5.6%, Guardian Metal Resources lost 5.4%, Empire Metals declined 5% and Greatland Resources fell 3.3%. Arc Minerals, Strategic Minerals and Tertiary Minerals recorded steeper percentage declines among the smaller companies.
Oil producers moved in the opposite direction as Brent crude remained near US$95 a barrel. Rockhopper Exploration gained 2.2%, while Serica Energy and Afentra rose 1.2% and 1% respectively.
The widening gap between the FTSE 100 and the smaller-company indices reinforced the risk-off pattern. The global bond sell-off has pushed the UK’s 10-year gilt yield close to 5.3%, increasing financing costs and placing greater pressure on companies with more domestic exposure or less access to inexpensive capital.
10.45 am: Bond sell-off intensifies pressure on London stocks
London’s decline deepened as a global government bond sell-off pushed UK borrowing costs to their highest level since 2008, placing pressure on technology, investment and smaller-company shares.
The FTSE 100 stood at 10,723.61, down 65.67 points or 0.61%. The FTSE 250 dropped 189.05 points, or 0.77%, to 24,332.24, while the AIM All-Share fell 0.94% to 788.61.
The losses had widened considerably from earlier in the day, when the FTSE 100 was down 37 points, the FTSE 250 had lost 109 points, and AIM was 0.6% lower.
The yield on the UK’s 10-year government bond climbed to approximately 5.27%, its highest since 2008, as investors continued to sell sovereign debt amid mounting inflation and government borrowing concerns.
Renewed hostilities between the US and Iran have pushed Brent crude towards US$95 a barrel, adding to fears that rising energy costs could keep inflation elevated and require central banks to maintain higher interest rates.
Higher bond yields can place particular pressure on growth companies by reducing the present value investors assign to their future earnings. They also increase financing costs for businesses and governments.
Technology and data-related companies featured prominently among the fallers. Computacenter dropped 3.4%, Experian and Sage declined approximately 2.2% and 2% respectively, while mid-cap identity technology specialist GB Group fell 3.5%.
Oxford Nanopore Technology bucked the trend, rising 2.7%.
Investment and wealth-management stocks were also under pressure. Foresight Group fell 4.6%, IP Group lost 2.9% and Molten Ventures declined 2.8%. ICG and St James’s Place dropped a little more than 2% each.
The financial sector was divided, however. Metro Bank gained 2.5%, NatWest advanced 1.6%, Admiral added 1.3% and Standard Chartered rose 0.9%.
Industrial-metals weakness provided another negative influence. Copper fell around 1% to US$14,133.50 a tonne, while zinc declined 1.4%, as the firm dollar and expectations of higher US interest rates weighed on demand expectations.
Atalaya Mining fell 3%, while AIM-listed Arc Minerals and Strategic Minerals declined 10% and 7.6% respectively. The sector was not uniformly weaker, with gold producer Endeavour Mining remaining marginally positive and Kazera Global gaining 28.6%.
Energy stocks provided one of the clearest pockets of support. Harbour Energy rose 1.5% and Ithaca Energy gained 1.3%, reflecting the strength in oil prices.
The sharper declines in the FTSE 250 and AIM indicated an increasingly risk-averse session, with the global bond sell-off providing a broader explanation for the retreat than weakness in any single commodity or sector.
Higher gilt yields also increase the government’s debt-servicing costs and could reduce the fiscal room available ahead of the 28 October Budget.
9.30 am: Small Caps add to pressure on London stocks
The FTSE 100 stood at 10,752.12, down 37.16 points or 0.34%. The FTSE 250 fell 108.60 points, or 0.44%, to 24,412.69, while the AIM All-Share dropped 0.6% to 791.26.
Industrial-metals shares came under pressure as benchmark copper on the London Metal Exchange fell 0.99% to $14,133.50 a tonne. Zinc declined 1.4%, with a stronger dollar and expectations of higher-for-longer US interest rates weighing on the complex.
The move provided a possible explanation for weakness among some copper-focused companies. Atalaya Mining declined 2.6%, while AIM-listed copper explorer Arc Minerals fell 10%, although a move of that size cannot be attributed to the copper price alone.
Mining was not uniformly weaker. Gold producer Endeavour Mining gained 1.7%, while Kazera Global jumped 31.8%, indicating that the pressure was concentrated in industrial metals and individual company movements.
Energy stocks provided one of the clearest pockets of support. Harbour Energy gained 2.4% and Ithaca Energy rose 1.5%, while AIM-listed Orcadian Energy advanced 8.6%.
Banks and insurers were also relatively resilient. NatWest added 1.4%, Admiral rose 1.4%, Investec gained 0.8% and Standard Chartered advanced 0.7%. Metro Bank was 1.3% higher among the mid-caps.
Hospitality shares outperformed, with InterContinental Hotels Group climbing 2.3% and Whitbread adding 0.9%.
Elsewhere, mid-cap weakness included Foresight Group, down 4.2%, AEP Plantations, 4.1% lower, Applied Nutrition, down 3.3%, and GB Group, which lost 3%.
The sharper fall in AIM compared with the FTSE 100 pointed to a mildly risk-off session, with the strong dollar and renewed interest-rate concerns adding to pressure on smaller and more speculative stocks.
8.45 am: FTSE 100 reverses early gain
The FTSE 100 reversed its brief opening gain as selling returned across London’s main markets.
The blue-chip index stood at 10,757.25, down 32.03 points or 0.3%.
The FTSE 250 fell 103.40 points, or 0.42%, to 24,417.89, while the AIM All-Share declined 0.47% to 792.34.
Computacenter led the FTSE 100 fallers, dropping 2.5%, followed by JD Sports Fashion, Reckitt Benckiser, Smith & Nephew and Informa.
InterContinental Hotels Group remained the strongest blue-chip performer, gaining 1.8%, while Admiral advanced 1.7% and NatWest rose 1.2%.
Among smaller companies, Kazera Global jumped 38.1% to 2.18p. The sharp individual rise was insufficient to prevent the wider AIM market from moving lower.
The figures confirm a broad retreat from the opening levels, although the markets.
8.15 am: FTSE 100 recovers as energy shares provide support
The FTSE 100 reversed its initial decline to trade marginally higher on Wednesday, outperforming the roughly 40-point fall indicated before the opening bell.
The blue-chip index was up 6.67 points, or 0.1%, at 10,795.95 in the latest supplied reading, compared with Tuesday’s close of 10,789.28.
The recovery represented a marked improvement from an earlier intraday reading of 10,775.36, when the index was down almost 14 points.
Mid-cap and smaller-company shares remained weaker. The FTSE 250 was down 76.92 points, or 0.3%, at 24,444.37, while the AIM All-Share declined 0.3% to 793.69.
InterContinental Hotels was the leading FTSE 100 riser, gaining 2.3%, followed by Admiral Group with a 1.5% advance.
BP rose 1.2% and Shell gained 1%, broadly aligning with continued strength in oil prices. Brent crude was 0.9% higher at US$95.51 a barrel at 7.56am BST, compared with Tuesday’s settlement of US$94.65.
West Texas Intermediate was up 0.6% at US$90.72 at 6.36am BST. Both contracts had eased from their overnight highs of US$97.04 and US$92.29, respectively.
NatWest gained 1.1%, while SSE, Halma and National Grid advanced around 1% each.
Bunzl was the largest blue-chip faller in the updated screen, declining 2%, followed by Pearson, which was down just under 2%.
JD Sports fell 1.7%, while Entain and Smith & Nephew both declined 1.6%. Auto Trader and ICG were also among the fallers.
Antofagasta lost 1.6% as copper prices remained lower. December copper futures were down 0.8% at US$6.545 per pound at 8.01am BST, compared with Tuesday’s US$6.6005 settlement.
December gold futures were 0.6% lower at US$4,370.70 an ounce at 6.50am BST, although the metal had recovered from an overnight low of US$4,329.20.
The dollar index edged 0.05% higher to 99.73 at 7am BST. Sterling was down 0.1% at US$1.3504 at 7.35am, having traded between US$1.3493 and US$1.3523.
The early FTSE recovery provided no evidence of a broad negative equity-market reaction to Prime Minister Andy Burnham’s Commons address. His fiscal and spending plans remain part of the domestic backdrop, but movements in oil, metals and global bond yields continue to provide the clearer immediate influences.
Bitcoin was trading near US$77,593 at 8.19am BST, down 1.4% from the previous close.
The risers screen was timestamped 8.06:30am BST and carried a delay of at least 15 minutes. The subsequent fallers screen showed a later FTSE 100 reading but did not display its quote timestamp.
7.00 am: London braced for weaker start as oil, yields and dollar rise
The FTSE 100 is expected to open around 40 points lower on Wednesday as rising oil prices, higher government borrowing costs and a stronger dollar compound the nervous mood across global markets.
FTSE futures were quoted between 10,750.5 and 10,753.5 shortly before 7 am BST, indicating a decline of approximately 0.4%.
The index closed Tuesday at 10,789.28, down 34.98 points or 0.3%, after recovering from an intraday low of 10,689.55. The selling was heavier among domestically focused companies, with the FTSE 250 declining 1.7% to 24,521.29 and the AIM All-Share falling 1.9% to 796.06.
Prime Minister Andy Burnham’s first Commons address remains part of the domestic backdrop after he outlined plans for greater public control of essential services, increased regional investment and further devolution.
Burnham also highlighted cuts to VAT on electricity and business rates for pubs, social clubs and live music venues, while promising that the government’s programme would be grounded in fiscal responsibility.
Britain’s bond sell-off was part of a wider global rise in yields driven largely by oil prices, inflation concerns and expectations that interest rates will remain elevated. Prime Minister’s address
The UK 10-year gilt yield reached approximately 5.25% on Tuesday, its highest level since 2008, while the 30-year yield approached 5.9%, a level last recorded in 1998. Higher yields increase government debt-servicing costs and place additional pressure on rate-sensitive shares, particularly among mid-cap property, retail and consumer businesses.
Oil prices extended their advance as renewed fighting between the United States and Iran sustained concern over supplies passing through the Strait of Hormuz.
Brent crude was quoted at $95.34 a barrel, up 0.7% from Tuesday’s $94.65 settlement. The contract traded as high as $97.04 overnight.
West Texas Intermediate stood at $90.76, up 0.6% from its $90.22 settlement after reaching an overnight high of $92.29.
The move could keep BP and Shell in focus after they gained 5.2% and 2.6%, respectively, on Tuesday. That is an indication based on the commodity backdrop rather than a confirmed share-price response, as London trading has not yet opened.
Precious and industrial metals moved in the opposite direction. December gold futures were $4,349 an ounce, down 1.1% from Tuesday’s $4,396.40 settlement.
December copper futures fell 0.9% to $6.541 per pound, while silver futures were approximately 1.7% lower at around $64.27 an ounce.
The weaker metals backdrop could leave gold producers Endeavour Mining and Fresnillo, and copper-exposed companies such as Antofagasta and Anglo American, under scrutiny. It should not be interpreted as confirmation that their shares will fall at the opening.
The US dollar strengthened as investors responded to rising Treasury yields and geopolitical uncertainty. The dollar index was up 0.1% at 99.78, compared with Tuesday’s close of 99.68.
Sterling slipped 0.15% to $1.3497, having traded between $1.3495 and $1.3523. A weaker pound can provide some translation support for the FTSE 100’s overseas earners, although the broader risk-off environment remains the dominant influence.
Wall Street closed lower on Tuesday, with the Dow Jones Industrial Average falling 0.8%, the S&P 500 losing 0.7% and the Nasdaq Composite declining 1%.
Asian markets followed Wall Street lower. Japan’s Nikkei 225 was down approximately 3%, South Korea’s Kospi fell around 4%, while the Hang Seng and Shanghai Composite both retreated close to 0.9%.
The ASX faced similar headwinds with the S&P/ASX 200 closing 93.3 points, or 1.03%, lower at 8,973.4.
Bitcoin was trading at approximately $77,684 shortly before 7 am BST, down 1.9% from the previous close. The cryptocurrency had moved between $76,483 and $79,154 during the session.
The UK corporate diary includes interim results from Oxford Biomedica, Cairn Homes, TT Electronics and Anglo-Eastern. No major FTSE 100 results are scheduled.
Investors will later turn to US employment figures, factory orders and the Federal Reserve’s Beige Book for further guidance on inflation and interest rates.
