8th Sep 2026 12:15
(Alliance News) - European equities struggled heading into Tuesday afternoon, with spiking bond yields remaining in focus, as another surge in the oil price intensified inflation fear.
The UK 10-year gilt yield topped 5.21% earlier on Tuesday, having sat at around 5.18% at the time of the London equities close on Monday.
The FTSE 100 index was down just 0.86 of a point, essentially flat, at 10,821.27. The FTSE 250 fell 51.50 points, 0.2%, at 24,455.18, and the AIM all-share fell 1.46 points, 0.2%, at 797.67.
The Cboe UK 100 was flat at 1,075.73, the Cboe UK 250 was down 0.3% at 21,235.67, and the Cboe small companies was down 0.2% at 18,720.18.
The CAC 40 in Paris lost 0.1%, while Frankfurt's DAX 40 fell 0.2%.
A barrel of Brent fetched USD98.60 midday Tuesday, up from USD97.89 at the time of the London equities close on Monday.
The yield on the US 10-year Treasury was quoted at 4.80%, widening from 4.78% at the time of the London equities close on Friday. The yield on the US 30-year Treasury stretched to 5.27% from 5.24%.
Financial markets in New York were closed on Monday. In New York on Tuesday, the Dow Jones Industrial Average is called down 0.8%, the S&P 500 down 0.3% and the Nasdaq Composite flat.
"There are two big moves that are driving markets this morning, the first is the jump higher in the oil price," XTB analyst Kathleen Brooks commented. "The oil price is pushing up bond yields in Europe and the UK."
"The yen is also in focus today. It has surged in the last 24 hours."
The yen faded from an intraday high by European dealings, however. Against the Japanese unit, the dollar declined to JPY154.18 from JPY154.33 at the time of the London equities close on Monday. It traded as low as JPY152.89 earlier on Tuesday.
Brooks added: "It would appear that official sources are unwilling to allow the USD/JPY to rise above 160, so this week's move could be designed to anchor this pair well below this key level. This suggests two things: 1, the US and Japanese authorities are serious about building yen strength, and 2, the chance of a move below 150 could be higher than a move back above 160."
Sterling traded at USD1.3523 on Tuesday afternoon, rising from USD1.3516 at the time of the London equities close on Monday. Versus the euro, it climbed to EUR1.1645 from EUR1.1638. The single currency traded at USD1.1609, fading from USD1.1629, ahead of an expected European Central Bank hike on Thursday.
An ounce of gold fell to USD4,394.47 on Tuesday from USD4,412.10 at the time of the London equities close on Monday. It had traded above the USD4,442 mark earlier on Tuesday.
XS.com analyst Rania Gule said gold is moving towards a "highly sensitive phase" as eyes turn to Friday's US consumer price inflation reading.
"In my view, gold's current price action does not necessarily reflect a fundamental deterioration in demand for the precious metal as much as it reflects investor caution and portfolio repositioning. This is particularly evident after recent economic data showed continued resilience in the US labour market, reviving debate over whether the Federal Reserve can maintain a more restrictive monetary policy for longer," Gule said.
"Gold managed to regain a limited amount of positive momentum at the start of Tuesday's trading session, benefiting from a pullback in the US dollar from its recent highs. However, this recovery still lacks the key catalyst needed to become a sustained bullish move."
In London, Computacenter shares fell 4.5%, returning an earlier advance. It lifted guidance and reported record half-year trading. Shares in the technology services firm have more than doubled over the past year and last month it received a boost after earnings from Nvidia impressed. Computacenter is an Nvidia partner.
"The key risk here would be one of contract timing. If a key contract due to be delivered in December slipped into January, Computacenter could miss our numbers, and - depending on the size of the contract - potentially miss consensus too. However, this would be delayed not lost revenue. It might cause an adverse reaction, but this would likely recover through strong FY 27 performance - which we believe is underwritten by the order book," Peel Hunt analyst Oliver Tipping commented.
Supporting the FTSE 100 were some of its heavyweights. Shell and BP tracked oil higher, climbing 0.5% and 1.2%. A robust copper price supported miners, with Rio Tinto and Anglo American up 0.7% and 1.8%, and Antofagasta jumping 4.3%.
Dunelm slumped 11% as it warned that hot weather tempered sales.
"Dunelm looks to have fallen foul of the wrong kind of weather as the sun was shining too bright over the summer to entice people into its stores. Retailers constantly look for a Goldilocks scenario for their seasons – just the right temperature to get people out of the house and shopping, but not too hot or cold to put them off. The kind of heatwave we’ve just seen in the UK was clearly too much for some people, keeping them in the cool of their home rather than sweating it out in retail parks or the high street. A warning about weaker trading in July and August has knocked Dunelm’s shares for six," AJ Bell analyst Dan Coatsworth commented.
Dunelm also reported steady annual profit and set out a three-year plan.
Elsewhere, STV shares fell 7.6%. It reported a chunkier half-year loss, as it booked an impairment in the Studios arm which has suffered due to "delays in decision-making and evolving market conditions".
The television broadcaster and content producer said pretax loss in the first half of 2026 widened to GBP22.7 million from GBP200,000 a year earlier. Revenue slumped 27% on-year to GBP66.1 million from GBP90.0 million. The top line decline was despite advertising revenue rising 5% to GBP48.1 million, "slightly ahead of guidance", due to the World Cup. But Studios revenue slumped 63% to GBP15.5 million from GBP42.2 million.
"Given the prolonged slowdown in commissioning activity, we have recognised a non-cash impairment charge in Studios, reflecting a prudent reassessment of short- to medium-term market conditions while remaining confident in the long-term growth prospects of our business and the opportunities ahead," CEO Rufus Radcliffe said.
The non-cash impairment of assets amounts to GBP25.4 million, hitting its bottom line.
By Eric Cunha, Alliance News news editor
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