21st Aug 2026 09:00
(Alliance News) - Stock prices in Europe opened slightly higher on Friday, but trade remained cautious as elevated bond yields, the Middle East conflict and worries over the health of the US consumer kept a lid on sentiment.
Numbers from Walmart on Thursday sent shares in the retailer sharply lower and had investors fretting that the US consumer is not in as fine a fettle as hoped. Early Friday, UK retail sales data similarly underwhelmed.
The FTSE 100 index opened up 22.21 points, 0.2%, at 10,770.37. The FTSE 250 was up 54.11 points, 0.2%, at 24,562.77, and the AIM all-share was up 3.28 points, 0.4%, at 807.37.
The Cboe UK 100 was up 0.2% at 1,071.36, the Cboe UK 250 was flat at 21,357.41, and the Cboe Small Companies was up 0.1% at 18,958.89.
In European equities on Friday, the CAC 40 in Paris was up slightly, while the DAX 40 in Frankfurt was flat.
The yield on the US 10-year Treasury was steady at 4.70% early Friday, where it stood at the time of the London equities close on Thursday. The yield on the US 30-year Treasury eased to 5.24% from 5.26%.
Wealth Club analyst Susannah Streeter commented: "Investors are wary at the end of the week, amid a fresh surge in government borrowing costs, as efforts to intervene in bond markets by the Trump administration failed to have their desired effect."
The Dow Jones Industrial Average closed down 1.3% on Thursday, the S&P 500 shed 0.9% and the Nasdaq Composite fell 1.0%. Walmart shares slumped overnight as its US sales fell short of expectations.
In Tokyo, the Nikkei 225 closed down 0.3% on Friday. In China, the Shanghai Composite was flat, though the Hang Seng Index in Hong Kong was up 1.0%. Sydney's S&P/ASX 200 ended down 0.3%.
Sterling rose to USD1.3649 early Friday from USD1.3634 late Thursday. Against the euro, it faded to EUR1.1667 from EUR1.1676. The single currency rose against the dollar, buying USD1.1694 compared to USD1.1678. Against the yen, the buck was steady at JPY158.87.
UK retail sales were weaker than expected last month, numbers on Friday showed, while public sector borrowing was higher than forecast.
The Office for National Statistics said UK retail sales volumes increased 1.6% on-year in July, slowing from a 3.8% improvement in June. The latest reading was shy of the FXStreet cited consensus, which had forecast a 2.2% increase.
On-month, retail sales fell 0.5% in July, in line with expectations, after a 0.7% rise in June from May. June's reading was downwardly revised from a 1.0% rise.
Separate ONS figures showed government borrowing rose in July, "as spending growth outpaced receipts despite strong self-assessed income tax revenue".
Public sector net borrowing totalled GBP1.80 billion last month, rising from GBP1.07 billion a year prior. It faded from GBP12.78 billion in June. Borrowing in July is typically lower than other months due to the timing of additional receipts from self-assessed income tax.
Nonetheless, the latest reading was above the FXStreet cited forecast which had predicted an on-year fall in borrowing to around GBP300 million.
The ONS noted that borrowing in the financial year up to July was GBP56.7 billion, GBP6.0 billion below the same period 12 months prior, but above an Office for Budget Responsibility forecast by GBP2.3 billion.
Wealth Club's Streeter commented: "Even though the amount the Exchequer is pulling in through higher taxes grew, helped by a strong influx of self-assessed income tax revenue payments, it's being outpaced by spending on public services, benefits and debt payments. Although debt interest costs were lower than in recent months, they are stubbornly higher than a year ago, which is keeping the new prime minister in a highly tricky position.
"It comes at a time when Andy Burnham is under pressure to deliver more meaningful support to households facing a cost-of-living squeeze, but he's still operating under the highly watchful eye of the bond market. This is the latest borrowing data to arrive under new Chancellor John Healey's watch and it is likely to lead to difficult decisions at the Treasury. Signs of greater profligacy with taxpayers' money could set off another spiral higher in borrowing costs, limiting available funds even further, given the eye-watering cost of servicing the debt."
The US on Thursday warned allies and China to join President Donald Trump's new campaign to isolate the Iranian economy, vowing that Washington would "collapse this regime" in Tehran.
Iran branded the US threats as "economic terrorism" and said they would fail.
Under fire at home over the impact of the war and with crucial midterm elections looming, Trump had on Wednesday promised the "most crushing" economic operation ever against Iran.
US Treasury Secretary Scott Bessent echoed the president's comments, doubling down on economic pressure on Tehran as Trump's unpopular war drags toward the six-month mark.
China said on Friday that US "sanctions and pressure" would not resolve the Middle East conflict, after Washington urged governments including Beijing to join efforts to isolate the Iranian economy.
"Sanctions and pressure will not help resolve the issue," Chinese foreign ministry spokesman Lin Jian told reporters at a news briefing, calling on "all relevant parties to take responsible measures and resolve the problem through political and diplomatic means".
A barrel of Brent fell to USD93.22 early Friday from USD93.53 at the time of the London equities close on Thursday. Gold rose to USD4,562.11 an ounce from USD4,518.45.
Fresnillo rose 3.8%, Endeavour Mining climbed 3.1% and Hochschild Mining added 4.6%, the trio tracking precious metals higher.
Hunting lost 15%. The provider of equipment and engineering services to the oil and gas industry cut its annual earnings outlook.
It noted Kuwait Oil Co will re-run a tender process originally issued in April.
"An accelerated tender process is now expected to be re-issued during Q3 2026, with the result announced within a month of issuance. Any new contracts awarded will not be recognised until 2027. Hunting has a strong relationship with KOC that is built on more than six years of technical collaboration and supply-chain qualification. Therefore, the directors continue to believe that Hunting remains well-placed to secure further orders from KOC and other tenders underway across the Middle East and Asia Pacific," it added.
Nonetheless the KOC tender process delay will hit its 2026 earnings before interest, tax, depreciation and amortisation by around USD10 million. As a result, it now expects a full-year outcome between USD138 million and USD141 million, "slightly below previous guidance".
eEnergy Group fell 12%. The net zero energy services provider is seeing "some short-term delays in receipt of payments" of around GBP3.2 million in total for completed work with the Mace project.
This is due to outstanding completion of paperwork. eEnergy said 65 Mace sites are "now fully operational and energised with the company's energy saving products".
By Eric Cunha, Alliance News news editor
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