London's Midcap FTSE Drops on Rising Yields; Reckitt Benckiser Shines
Market Overview and Key Drivers
Sept 1 (Reuters) - London's midcap FTSE index on Tuesday logged its biggest one-day drop since March as Middle East tensions pushed up global bond yields on inflation concerns, while Reckitt Benckiser gained after a favourable U.S. court ruling.
The export-focused FTSE 100 index closed 0.32% lower at 10,789 points while the domestically focused FTSE 250 declined 1.67%.
Global Factors Impacting Markets
Middle East Tensions and Oil Prices
• The United States and Iran traded fresh fire, sending Brent crude prices up to over $92 a barrel and sparking a bond selloff globally as investors mulled the repercussions on the world economy.
Rising Bond Yields and Interest Rate Expectations
• The yield on the UK 10-year Gilt hit its highest since 2008. Investors now see the Bank of England hiking interest rates by at least 31 basis points by year end — up from around 24 bps last week — LSEG-compiled data showed.
Sector Performance
Financials and Rate-Sensitive Sectors
• Rate-sensitive sectors were especially hit: Financial stocks such as Barclays fell 2.1%, Aberdeen dropped 2.86% and Prudential lost 1.7%.
Other Sectors: Housing, Mining, and Energy
• Housing goods and home construction fell 2.3%, while precious metal miners tanked 5.4% and led sectoral losses on lower bullion prices.
Economic Data
• On the data front, house prices rose in August, mortgage lender Nationwide said, reflecting demand held up despite an uncertain economic outlook.
• Manufacturing activity slowed slightly in August to its weakest since March, S&P Global said.
Company Highlights
Reckitt Benckiser's Positive Outcome
• Bucking broader weakness, Reckitt Benckiser added 4.4% after a U.S. jury favoured the company in its trial over claims that it failed to warn that its products for premature babies could cause a deadly bowel disease.
Energy and Biotech Movers
• Energy stocks BP and Shell rose 5.2% and 2.6%, respectively, tracking higher crude prices. [O/R]
• Oxford BioMedica tumbled 14.7% after Novartis and Bristol-Myers Squibb, both having ties with the company, paused clinical trials of CAR-T treatment for autoimmune disorders.
Mergers and Acquisitions
• Bodycote jumped 4.6% after U.S.-based private equity firm Veritas Capital agreed to buy the thermal processing services company in a £1.85 billion ($2.51 billion) deal.
Additional Information
($1 = 0.7390 pounds)
(Reporting by Anand Gopal and Johann M Cherian in Bengaluru; Editing by Nivedita Bhattacharjee and Joyjeet Das)
