FTSE 100 drops 1.5% as 10‑year gilt yield rises to 5.31% and retail sales rebound
London markets fell on Friday after bond yields climbed, while ONS data showed a modest recovery in August retail volumes
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The Standard reported that the FTSE 100 index ended Friday at 10,659.13, down 157.01 points or 1.5 per cent. The decline came as bond yields moved higher, prompting investors to reassess risk across UK equities.
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In London, the yield on the 10‑year gilt was quoted at 5.31 per cent, an increase from 5.21 per cent the day before, The Standard said. The rise followed the Bank of Japan’s decision to lift its policy rate, adding pressure to global fixed‑income markets.
Panmure Liberum analyst Simon French told The Standard that if the Bank of England follows the projected path, “the MPC will be reluctant hikers of UK interest rates, but with household energy prices on track to rise 25% in January there is a growing risk of second order impacts to consumer prices.”
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If this comes to pass the MPC will be reluctant hikers of UK interest rates, but with household energy prices on track to rise 25% in January there is a growing risk of second order impacts to consumer prices.
Simon French, Panmure Liberum analyst
RBC Capital Markets also revised its outlook, inserting a 25‑basis‑point hike for the November meeting, The Standard noted. Morgan Stanley warned that higher oil prices could slow disinflation, adding further pressure on monetary policy.
Retail sales show modest recovery
Office for National Statistics data, cited by The Standard, indicated that UK retail sales volumes increased by 0.5 per cent month‑on‑month in August. The figure reversed a 0.5 per cent decline recorded in July and exceeded the 0.2 per cent fall that markets had expected.
The ONS report also revised June’s increase to 0.6 per cent from an earlier estimate of 0.7 per cent. Analysts see the August bounce as a short‑term lift, but note that consumer spending remains vulnerable to energy‑price pressures.
What comes next for markets
The Standard said that investors will watch the Bank of England’s November Monetary Policy Committee meeting for any sign of a rate hike. In the meantime, the FTSE 100 is likely to remain volatile as bond yields continue to respond to global central‑bank actions and energy‑price developments.
Questions this report answers
+How much did the FTSE 100 fall on Friday?
The FTSE 100 closed at 10,659.13, down 157.01 points or 1.5 per cent, as reported by The Standard. The drop reflects investor reaction to rising bond yields and concerns over future interest‑rate moves.
+What was the 10‑year gilt yield on Friday?
London’s 10‑year gilt yield traded at 5.31 per cent on Friday, up from 5.21 per cent the previous day, according to The Standard. The higher yield contributed to the equity market sell‑off.
+Did UK retail sales improve in August?
Office for National Statistics figures, cited by The Standard, showed retail sales volumes rose 0.5 per cent month‑on‑month in August, reversing a 0.5 per cent decline in July and beating market expectations of a 0.2 per cent fall.
+What are analysts expecting from the Bank of England?
Analysts at Panmure Liberum and RBC Capital Markets, as reported by The Standard, now anticipate a 25‑basis‑point rate increase at the Bank of England’s November meeting, reflecting concerns over energy‑price inflation and higher bond yields.
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