9th Sep 2026 12:14
(Alliance News) - Stock prices in Europe were sharply lower on Wednesday afternoon, as widening bond yields and a soaring oil price in the face of continued Middle East tensions unnerved investors.
The FTSE 100 index fell 98.97 points, 0.9%, at 10,712.69. The FTSE 250 fell 174.68 points, 0.7%, at 24,174.17, and the AIM all-share fell 0.80 of a point, 0.1%, at 795.95.
The Cboe UK 100 was down 0.9% at 1,065.57, the Cboe UK 250 was down 0.7% at 20,983.95, but the Cboe small companies was up 0.1% at 18,701.43.
The CAC 40 in Paris plunged 1.9%, while Frankfurt's DAX 40 slumped 1.5%.
The pound fell to USD1.3540 on Wednesday, from USD1.3548 on Tuesday. Against the euro, it was down at EUR1.1637 from EUR1.1643. The euro was flat at USD1.1631. Against the yen, the dollar fell to JPY153.52 from JPY154.18.
The yield on the US 10-year Treasury widened to 4.81% midday Wednesday from 4.80% at the time of the London equities close on Tuesday. The yield on the US 30-year Treasury was steady at 5.25%. In August, the 30-year Treasury yield had spiked to just under 5.34%, its loftiest level since 2007.
In the UK, the debt office sold a 30-year gilt at the highest yield since the body was established in 1998, according to results published on Tuesday, highlighting the pressure on public sector finances.
The Debt Management Office re-opened the 5.375% Treasury gilt 2056 through a syndication at a yield of 5.8168%.
Proceeds from the sale are expected to amount to some GBP4.0 billion, though total orders topped GBP87 billion, suggesting investor demand was strong.
Government bond yields across the globe have sat at elevated levels in recent weeks amid rising inflation expectations, partly driven by a surge in the oil price.
A barrel of Brent spiked to USD100.82 midday Wednesday, from USD98.00 late Tuesday afternoon.
"Brent crude pushing above USD100 a barrel has had a psychological effect on the market, pushing a hypothetical inflation worry gauge to 'serious' status and dragging down financial assets," AJ Bell analyst Dan Coatsworth commented.
"Bond yields moved higher in reaction to oil's ongoing ascent and what that could mean for interest rates. The 10-year gilt briefly hit 5.129% while the 30-year gilt topped 5.824% before easing back slightly. The longer this trend remains in motion, the smaller the budget headroom for new chancellor John Healey. Rising borrowing costs will put more pressure on the government to consider tax rises, spending cuts or both."
BP and Shell rose 1.5% and 0.6%, tracking Brent higher and ensuring the FTSE 100 avoided the sharper sell-off seen in European peers. Among the other stocks popular amid the risk-off move were utilities. SSE rose 1.2%, Severn Trent added 1.0% and National Grid was up 0.4%.
In New York, the Dow Jones Industrial Average was called down 0.5%, the S&P 500 is to open down 0.3% and the Nasdaq Composite down 0.4%.
There is a 62% chance that the Federal Reserve hikes rates next week Wednesday, according to the CME FedWatch Tool. A month ago, that likelihood was 44%.
Pantheon Macroeconomics analyst Samuel Tombs commented: "August's CPI report has become very consequential after many FOMC members have signalled they will vote to tighten policy next week in the absence of further progress towards the 2% target. The precise threshold for tightening is unclear and will vary by member.
"Some will view August's print in isolation and consider a 0.21% print, which would annualize to the current year-over-year rate of 2.5%, as the threshold. Others likely will be satisfied if the year-over-year rate falls to 2.4%."
The Fed decision is on a knife-edge but the European Central Bank is widely expected to hike.
ING analyst commented: "The ECB must decide which risk is the lesser evil: overtightening (and potentially upsetting European bonds) or underestimating inflation. A 25bp hike is widely expected on Thursday, and we think the Bank may strike a more cautious tone – dovish, relative to markets' aggressive pricing."
An ounce of gold fell to USD4,400.44 midday Wednesday from USD4,494.00 late Tuesday afternoon.
Back in London, Victrex shares surged 14%. It has lifted its annual guidance, as the polymer solutions provider says "strong momentum" has continued into its fourth quarter.
Victrex, which serves industries including the aerospace, medical and automotive sectors, is seeing "good growth across all regions". The firm's financial year runs to September 30.
As a result, it now expects underlying pretax profit in the range of GBP45 million and GBP47 million, ahead of a prior forecast of GBP42 million to GBP44 million.
Mortgage Advice Bureau slumped 18%. The mortgage broker now expects 2026 adjusted pretax profit of GBP38.0 million, below consensus of GBP43.4 million.
"The housing and mortgage market backdrop has become more challenging over the summer, with global developments adding to uncertainty over inflation and the path of borrowing costs. The group does not expect a meaningful recovery in purchase activity in the short term. UK purchase transactions were 3% lower in the first seven months of 2026, while mortgage approvals for house purchase fell by 15% year-on-year in July," MAB explained.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2026 Alliance News Ltd. All Rights Reserved.
Related Shares:
ShellBPSSESevern TrentNational GridVictrexMortgage Advice Bureau