London shares slip as higher oil prices lift bond yields; BoE in focus

London Shares Slip as Oil Prices Lift Bond Yields Ahead of BoE Meeting

Market Overview and Key Drivers

Sept 15 (Reuters) - London shares slipped on Tuesday, hovering around two-month lows, as rising oil prices prompted a fresh rise in bond yields, while investors assessed domestic economic data ahead of a Bank of England monetary policy meeting later this week. 

The blue-chip FTSE 100 index fell 0.4% to 10,658.13 points, while the midcap FTSE 250 slipped 0.1% to 23,818.74 points.

Oil Prices and Energy Sector Impact

• Oil prices rose 2% after attacks on Saudi energy infrastructure raised supply concerns, in turn lifting shares of Shell and BP.

Financial Sector Performance

Major UK Banks and Brokerages

• Major banks, investment banks and brokerages were the top fallers with HSBC down 2.2% and Barclays 1.7% lower.

U.S. Banking Sector Trends

• U.S. banks came under pressure for a second day after Bank of America CEO Brian Moynihan said on Monday he expects investment banking fees to drop by at least 10% in the third quarter, and sales and trading revenue to be flat.

Bond Yields and Monetary Policy Outlook

Global Bond Yield Movements

• Global bond yields soared, with the UK 30-year gilt yield touching its highest since 1998 at 5.40%, as investors bet that rising oil prices could prompt central bank interest rate rises.

Bank of England Actions

• A report said that the BoE is poised to announce this week that it will stop selling 20- and 30-year gilts, potentially freeing up some cash for finance minister John Healey.

Economic Data and Market Expectations

Labour Market and Inflation Trends

• Britain's jobs market stayed weak in the third quarter, while a separate report showed grocery price inflation increased to 2.3% over the four weeks to September 6. Official data on inflation is due on Wednesday.

Interest Rate Projections

• Traders see the BoE leaving interest rates unchanged at its monetary policy meeting, but still see rates rising by at least 48 basis points by year-end, LSEG-compiled data showed.

Company-Specific Movers

Wickes Group

• Wickes Group gained 8.3% after the home improvement retailer reported strong third-quarter trading, driven by mid-single-digit growth in retail like-for-like revenue.

Trustpilot

• Online reviews platform Trustpilot's shares plummeted 18.6% as its decision to leave its earnings outlook unchanged disappointed investors.

Reporting Credits

(Reporting by Anand Gopal and Johann M Cherian in Bengaluru; Editing by Alexander Smith)