15th Sep 2026 09:10
(Alliance News) - Stock prices in Europe opened lower on Tuesday, with elevated bond yields, a lofty oil price and underwhelming China data combining to keep sentiment subdued, on the eve of the next Federal Reserve decision.
The FTSE 100 index declined 100.40 points, 0.9%, at 10,597.17. The FTSE 250 fell 139.46 points, 0.6%, at 23,695.02, and the AIM all-share was down 0.77 of a point, 0.1%, at 784.27.
The Cboe UK 100 was down 0.9% at 1,053.49, the Cboe UK 250 was down 0.6% at 20,529.25, and the Cboe small companies was down 0.2% at 18,580.36.
The CAC 40 in Paris was down 1.0%, while the DAX 40 in Frankfurt was down 0.5%.
Sterling was quoted at USD1.3476 early Tuesday, down from the USD1.3481 it fetched at the time of the London equities close on Monday. Versus the euro, the pound fell to EUR1.1674 from EUR1.1679.
The single currency traded at USD1.1539 against the dollar, down fractionally from USD1.1541 a day prior. Against the yen, the dollar rose to JPY154.87 from JPY154.59.
The yield on the US 10-year Treasury widened to 5.04% on Tuesday morning, from 4.96% late Monday afternoon. The yield on the US 30-year Treasury stretched to 5.39% from 5.34%.
Both yields hit their loftiest levels since 2007, before focus turns to Fed Chair Kevin Warsh.
Quintex Intel analyst Stephen Innes commented: "We have finally had a look at 5% on the US 10-year, and now the market has to decide whether that was simply a line in the sand or the first step toward a much more uncomfortable destination.
"The obvious logic says a Fed hike should help calm the back end. Warsh moves 25 basis points, the Fed restores some inflation-fighting credibility, and long yields should, in theory, settle down. The problem is that the long end has become extremely flighty, and a hike can just as easily be read as validation of everything the bond market has been pricing for months. If the Fed is forced to tighten into an economy that is still holding together while oil keeps the inflation pulse elevated, the 10 year could simply use the decision as another excuse to push back through 5%."
In Tokyo, the Nikkei 225 closed flat. In China, the Shanghai Composite fell 0.5%, while the Hang Seng Index in Hong Kong was down 1.0% in late trade. The S&P/ASX 200 lost 0.9%.
China's unemployment rate rose in August, with retail sales slowing as industrial production accelerated, official data showed Tuesday.
According to the National Bureau of Statistics, the urban surveyed unemployment rate was 5.3% in August, accelerating from 5.2% in July.
Retail sales rose 0.4% year-on-year in August, below the 0.6% increase the previous month and missing the 0.8% growth consensus forecast cited by FXStreet.
In London, stocks with an exposure to China were in the red. Lender Standard Chartered fell 2.2%, miner Antofagasta shed 1.7% and insurer Prudential declined 0.9%.
Analysts at ING commented: "Weak Chinese consumption and investment persisted amid soft domestic demand, while solid external demand continues to support industrial activity. Overall, China's third-quarter GDP looks likely to stay near or below the low-end of the target range."
In the US on Monday, Wall Street ended lower, dragged down by AI worries, with the Dow Jones Industrial Average down 0.3%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.6%.
XTB analyst Kathleen Brooks commented: "The biggest decliners on the S&P 500 included GE Vernova, Dell, Micron Technology, Hewlett Packard and Broadcom. All of these companies are essential to the AI build out. They fell sharply on Monday, even though no hyperscaler cut capex guidance.
"Looking ahead, Q3 earnings season will be the key test for the AI trade as hyperscalers update their guidance. If they reduce AI spending due to safety concerns that is when we could see another sell off in the AI chip trade."
The UK jobless rate was steady in the three months to July, defying expectations of an increase, according to numbers from the Office for National Statistics on Tuesday.
The UK unemployment rate remained at 4.9% in the three months to July, where it stood in three month stretch to June. According to consensus cited by FXStreet, it had been expected to rise to 5%.
According to the ONS, payrolled employees in the UK fell by 101,000 on-year in July, declining 19,000 from June.
An early estimate for August showed payrolled employees were 145,000 lower year-on-year and down by 26,000 from July.
Over the three month period, average total earnings growth was 3.9%, cooling from 4.2% in the three months to June, but in line with FXStreet cited consensus. Excluding bonuses, earnings growth was 3.5%, also in line with consensus, and steady from June.
Looking at the private sector alone, a figure closely tracked by the Bank of England, total pay growth abated to 3.2% in the period to July from 3.7% in the stretch to June. Excluding bonuses, private sector wage growth was steady at 2.9%.
Analysts at Barclays commented: "Wage pressures remain benign, while labour force survey data on quantities remains at odds with tax data that suggests a weaker picture. We do not think today's release changes the outlook for the BoE."
Gold fell to USD4,280.81 an ounce, from USD4,291.66 late Monday afternoon. Brent fell to USD107.54 a barrel from USD108.30.
Saudi Arabia warned Tuesday it will react "firmly" to Yemen's Houthis, after a series of attacks carried out by the pro-Iranian rebels using ballistic missiles and drones wounded 13 civilians in the country's south.
The Houthis have been engaged in renewed fighting with Saudi-backed government forces since Yemen's civil war reignited in July, when the group declared a maritime blockade on Riyadh and began targeting its ships in the Red Sea.
The group seized control of Yemen's Red Sea coast and the Bab al-Mandab Strait last week, which has become vital as the wider US-Iran war chokes the Strait of Hormuz, in a significant blow to Yemeni government forces.
Back in London, packaging firm Mpac fell 6.6%. Its pretax loss in the first half of 2026 narrowed to GBP500,000 from GBP8.8 million, though revenue fell 2.3% to GBP71.0 million from GBP72.7 million.
"The pipeline of potential future projects continues to grow, and is now larger and building faster than last year. However, global customer decision making remains slow, and the impact of 50% US tariffs recently imposed on goods from Canada is not yet clear. The timing of a broader market recovery remains uncertain," it cautioned.
By Eric Cunha, Alliance News news editor
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