Source: Sharecast
The FTSE 100 was down 0.5% at 9,153.67, while the 30-year gilt yield hit 5.71% - the highest since 1998. Bond yields move inversely to bond prices.
At the same time, sterling was down 1.2% against the dollar at 1.3382.
Kathleen Brooks, research director at XTB, said the key driver of weakness in the bond market could be a delayed reaction to the government reshuffle on Monday.
"The Prime Minister beefed up his economic team in the lead up to the budget. This has not gone down too well, with concerns that there is still a strategy void when it comes to the economy, as the government struggles to deliver the growth that it promised, at the same time as borrowing surges," she said.
Brooks said there could also be some concern that Chancellor Rachel Reeves is being "managed out".
"The last time there was a threat to Reeves’ position, back in early July, bond yields jumped as the market worried that she could be replaced by a more left-leaning member of the Labour party," she noted.
It wasn’t just UK bond yields making sharp moves on Tuesday, however, with European bonds yields jumping to multi-year highs.
In equity markets, retailers were under the cosh, with Marks & Spencer, Dunelm and B&M all in the red.
British Gas owner Centrica fell even as it said two UK nuclear power stations in which it has a 20% share had been given life extensions of a year. Heysham 1 and Hartlepool are now expected to generate electricity until March 2028, one year later than previously expected.
British American Tobacco was knocked lower by a downgrade to ‘underperform’ from ‘sector perform’ at RBC Capital Markets, which said profit expectations for the company's New Categories are "seriously overblown".
Ithaca Energy tumbled after major shareholders Delek and Eni sold just over 49.6m shares in the company in a placing.
Housebuilder Taylor Wimpey was knocked lower by a downgrade to ‘neutral’ at Bank of America, with Barratt Redrow, Persimmon and Berkeley also lower.
On the upside, precious metals miner Fresnillo shot to the top of the FTSE 100, while gold miner Hochschild also gained as gold prices hit a new all-time high.
Harbour Energy was boosted by an initiation at ‘overweight’ by JPMorgan, whose stance was underpinned by "scale-driven cost reductions, free cash flow resiliency, and a strong balance sheet" which "leaves runway for an additional buyback program in 2026".
Market Movers
FTSE 100 (UKX) 9,153.67 -0.46%
FTSE 250 (MCX) 21,288.95 -1.59%
techMARK (TASX) 5,367.48 -0.77%
FTSE 100 - Risers
Fresnillo (FRES) 1,867.00p 2.30%
Shell (SHEL) 2,755.50p 1.42%
AstraZeneca (AZN) 11,986.00p 1.15%
Coca-Cola Europacific Partners (DI) (CCEP) 6,610.00p 1.07%
Unilever (ULVR) 4,711.00p 1.01%
BP (BP.) 435.15p 0.95%
Diageo (DGE) 2,057.00p 0.83%
Haleon (HLN) 363.30p 0.72%
GSK (GSK) 1,456.00p 0.59%
Smurfit Westrock (DI) (SWR) 3,456.00p 0.55%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 328.30p -4.65%
Entain (ENT) 837.60p -3.90%
Phoenix Group Holdings (PHNX) 657.00p -3.60%
Airtel Africa (AAF) 215.60p -3.32%
SSE (SSE) 1,622.00p -3.25%
St James's Place (STJ) 1,225.00p -3.24%
Persimmon (PSN) 1,039.00p -3.21%
Land Securities Group (LAND) 534.50p -3.17%
Legal & General Group (LGEN) 237.80p -3.14%
Auto Trader Group (AUTO) 775.00p -3.13%
FTSE 250 - Risers
Hochschild Mining (HOC) 308.20p 2.73%
Spirent Communications (SPT) 196.60p 0.61%
Endeavour Mining (EDV) 2,640.00p 0.61%
Worldwide Healthcare Trust (WWH) 334.50p 0.60%
RHI Magnesita N.V. (DI) (RHIM) 2,045.00p 0.49%
Apax Global Alpha Limited (APAX) 164.20p 0.49%
Personal Assets Trust (PNL) 519.00p 0.39%
JPMorgan Indian Investment Trust (JII) 1,040.00p 0.39%
JPMorgan American Inv Trust (JAM) 1,068.00p 0.38%
JPMorgan Emerging Markets Inv Trust (JMG) 119.80p 0.34%
FTSE 250 - Fallers
Ithaca Energy (ITH) 210.50p -11.37%
Oxford Nanopore Technologies (ONT) 174.00p -6.10%
B&M European Value Retail S.A. (DI) (BME) 224.70p -5.75%
W.A.G Payment Solutions (WPS) 94.80p -5.67%
IP Group (IPO) 58.00p -5.07%
Raspberry PI Holdings (RPI) 403.40p -4.99%
Dunelm Group (DNLM) 1,137.00p -4.93%
Bakkavor Group (BAKK) 222.50p -4.71%
Auction Technology Group (ATG) 320.50p -4.47%
Bellway (BWY) 2,238.00p -4.44%