UK stocks fall as lack of progress in US-Iran talks lifts oil prices
EWU•UK shares fell as continued Middle East fighting and little progress in US-Iran talks pushed oil prices more than 4% higher. The FTSE 100 dipped 0.24% to 10,679.99 points, while the FTSE 250 slipped 0.85%.
1. Oil and bond yields rise
Oil prices rose more than 4% after Yemen’s Iran-backed Houthis fired missiles at Saudi Arabia and US-Iran talks showed little sign of progress. BP gained 2.6% and Shell rose 1.7%, while UK gilt yields rose with global bond yields; the 10-year gilt yield reached a more than one-week high of 5.38%.
2. Company shares diverge
Vistry fell 3.1% after lowering its annual profit expectations and saying its strategic overhaul would cost £470 million ($622.51 million). Raspberry Pi jumped 19.6% after reporting higher first-half revenue and pretax profit. Rolls-Royce and BAE Systems fell 1.3% and 1.5%, respectively.
3. Rate and budget outlook
Finance minister John Healey may reportedly accept a smaller fiscal buffer to reduce tax rises in next month’s budget. Bank of England deputy governors Clare Lombardelli and Sarah Breeden hinted at possible future rate hikes, while Swati Dhingra said winter would be key to judging UK inflation risks; traders were fully pricing in at least one 25-basis-point hike this year.
