15th Sep 2026 17:03
(Alliance News) - The FTSE 100 ended lower on Tuesday, albeit well above early worse levels, as high bond yields, fears of higher interest rates and elevated oil prices kept buyers on the sidelines.
In London, the FTSE 100 index ended down 39.44 points, 0.4%, at 10,658.13. It had earlier traded as low as 10,586.39.
The FTSE 250 lost 15.74 points, 0.1%, at 23,818.74, and the AIM all-share declined 1.89 points, 0.2%, to 783.15.
The Cboe UK 100 ended down 0.3% at 1,059.46, the Cboe UK 250 ended flat at 20,645.03, and the Cboe small companies was down 0.9% at 18,464.80.
"There's no let-up in the volatility rippling through financial markets, with energy prices staying painfully elevated and worries swirling about the knock-on effect for inflation and interest rates," commented Susannah Streeter, chief investment strategist at Wealth Club.
Oil prices remained stubbornly high on Tuesday amid no signs of respite in the US-Iran war, adding to worries of higher inflation.
Brent oil was quoted at USD108.48 a barrel in London on Tuesday, up from USD108.30 late on Monday.
Streeter said the conflict has "become more entrenched, with Iran clearly in this fight for the long haul, and it's led to fresh worries that higher energy costs will become embedded in economies, leaving companies with little choice but to hike prices on a vast range of goods."
The threat of accelerating inflation fed into higher bond yields as investors priced in more interest rate hikes than before.
The yield on the US 10-year Treasury was quoted at 5.01%, widening from 4.96%, after earlier hitting a 19-year high of 5.02%. The yield on the US 30-year Treasury was quoted at 5.37%, stretched from 5.34%.
The yield on 10-year UK gilts stretched to 5.41%, a 19-year high, from 5.38% at the same time on Monday.
The higher yields come ahead of interest rate decisions in the US on Wednesday and the UK on Thursday.
Ahead of the Federal Reserve meeting, Morgan Stanley shifted its stance and now expects a quarter-point rate increase, with a same-sized rise in December. It had previously expected the US central bank to remain on hold this year.
"While inflation continues to decelerate, recent upside surprises mean the pace of disinflation has been slower and less convincing than the committee likely requires," Morgan Stanley said in a research note.
"When the Fed goes into action, it rarely moves once. We expect one more hike in December, but the Fed then pauses as inflation moderates," it added.
As for the Bank of England, Peel Hunt analyst Kallum Pickering expects a "cautious hold".
He then notes his expectations differ markedly from the market view.
"Whereas I see the BoE holding for the rest of this year before cutting twice next year once inflation risks fade, money markets price in around four hikes by spring 2027, with a hold this week and the first hike coming in November," he pointed out.
In European equities on Tuesday, the CAC 40 in Paris dropped 0.3%, and the DAX 40 in Frankfurt fell 0.2%.
In New York, the Dow Jones Industrial Average was down 0.9% at the time of the closing bell in London. The S&P 500 fell 0.5%, and the Nasdaq Composite declined 0.7%.
In London, investors also weighed data which showed the UK labour market is showing further signs of cooling beneath a resilient headline unemployment rate.
The UK unemployment rate remained at 4.9% in the three months to July, unchanged from the three months to June, and below the 5.0% jobless rate expected by consensus cited by FXStreet.
But more timely payroll data painted a weaker picture. Payrolled employee numbers fell by 101,000, or 0.3%, in July from a year earlier and declined by 19,000, or 0.1%, from June.
An early estimate for August suggested the weakness continued, with payrolls down 145,000, or 0.5%, annually and 26,000, or 0.1%, from July.
Richard Carter, head of fixed interest research at Quilter Cheviot, said: "The UK jobs market still appears to be stuck in a slump."
More encouragingly for the Bank of England, average total earnings growth cooled to 3.9% in the three months to July from 4.2% in the three months to June, in line with the FXStreet-cited consensus.
Private sector total pay growth slowed to 3.2% from 3.7%, while regular private sector wage growth remained at 2.9%.
Barclays said wage pressures remained "benign" and will give comfort to the Monetary Policy Committee.
The pound was quoted at USD1.3485 on Tuesday, up modestly from USD1.3481 at the same time on Monday. Against the euro, sterling edged up to EUR1.1681 from EUR1.1679.
The euro nudged up to USD1.1545, from USD1.1541. Against the yen, the dollar was trading at JPY155.12, up from JPY154.59.
On the FTSE 100, defence contractors Babcock International and BAE Systems both rose 3.4% as the Middle War rumbles on, with oil major Shell up 2.0%.
Software stocks, a strong feature on Monday, gave back some ground with Relx down 2.6%, Experian down 2.0% and London Stock Exchange down 3.2%.
On the FTSE 250, Wickes led the way, up 8.3%, as it said it is on course to meet full-year profit expectations after reporting a "significantly" improved trend so far in its third quarter.
But Trustpilot slid 19%. It delivered mostly in-line results but shares fell as a couple of accounting discrepancies took some of the gloss off what it called a "strong" first-half.
Muddying the waters, the Copenhagen-based consumer review platform said it has taken a USD1 million provision after identifying an exposure where US sales tax had not been applied to certain customer invoices in prior years.
"The prior periods have been restated to reflect management's best estimate of the provision required. This restatement has no impact on underlying current trading, cash flows, adjusted Ebitda or our FY26 financial guidance," the firm stressed.
In addition, Trustpilot said it recently identified that technical guidance on the determination of distributable reserves was incorrectly applied.
Panmure Liberum analyst Sean Kealy called the announcements a "couple of missteps".
"This is undoubtedly a speed bump on the company's maturation journey, but it is firmly on that journey," the Panmure Liberum analyst added.
Amid the share price fall, analysts remained positive on the prospects for Trustpilot stock.
Bank of America retained a 'buy' rating and 332p price target, Panmure Liberum retained a 'hold' rating and 250p target, Peel Hunt retained a 'buy' rating and 380p target, and JPMorgan retained an 'overweight' rating and 350p price target.
Gold was quoted at USD4,285.70 an ounce on Tuesday, down from USD4,291.66 on Monday.
The biggest risers on the FTSE 100 were BAE Systems, up 66.00p at 2,006.00p, Babcock International Group, up 32.60p at 993.60p, Shell, up 70.50p at 3,652.50p, Kingfisher, up 5.60p at 293.50p and BP, up 9.10p at 580.30p.
The biggest fallers on the FTSE 100 were London Stock Exchange Group, down 274.00p at 8,200.00p, IG Group Holdings, down 36.00p at 1,309.00p, Relx, down 67.00p at 2,536.00p, Glencore, down 15.00p at 576.00p, and Antofagasta, down 85.00p at 3,501.00p.
Wednesday's local corporate calendar has full-year results from housebuilder Barratt Redrow and greetings card retailer Moonpig.
Wednesday's global economic calendar has UK inflation figures, followed by US retail sales and the US interest rate decision and press conference.
By Jeremy Cutler, Alliance News reporter
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