UK's FTSE 100 ends marginally higher as bond yields resume their rise
FTSE 100 Performance and Market Drivers
May 19 (Reuters) - UK's blue-chip FTSE 100 ended slightly higher on Tuesday as the global move higher in government bond yields hit sentiment, overshadowing optimism stemming from labour market data that eased worries of an immediate rate hike.
Index Movements
The blue-chip FTSE 100 index closed 0.1% higher at 10,330.5 points after rising as much as 0.8% earlier in the day. The midcap FTSE 250 reversed its initial gains to fall 0.2%.
Labour Market Data and Rate Hike Expectations
Employment Trends
• Data showed Britain's employers reined in their hiring and posted fewer job vacancies in April, prompting investors to cut their bets on Bank of England interest rate hikes.
Expert Commentary
• "For the MPC, this sharpens the policy tension: while energy‑driven inflation risks dominate near term, the labour market backdrop is already loosening, increasing the risk that policy remains too tight and entrenches unnecessary weakness," said Jefferies economist Modupe Adegbembo.
Rate Hike Probabilities
• Traders expect a 29.1% chance of a rate hike at the June meeting, according to data compiled by LSEG.
Bond Yields and Sector Performance
Government Bond Yields
• Long-dated government bond yields resumed their uptrend on Tuesday as the inflationary impact of the Iran war unsettled investors.
• Yield on both the 10-year gilt and the 30-year gilt were higher on the day after inching lower in the last session.
Sector Movements
• Most FTSE 350 sectors trended higher, with medical equipment and services and personal goods among the top gainers.
Mining Sector Impact
• A drop in metal prices hit miners listed in the UK, with the sector for precious metal miners sliding 3.7%, and industrial metal miners down 2.7%.
Political Developments and Company Highlights
Political Uncertainty
• Meanwhile, political uncertainty still remained in focus as Keir Starmer earlier this week reiterated that he would remain at the helm, but several of his Labour Party's lawmakers have called for him to quit.
Notable Stock Movers
• Among single stocks, IG Group rose 10.5%, the biggest gainer on the FTSE 100, after it raised its annual and medium-term revenue forecasts for the second time this year.
(Reporting by Niket Nishant and Shashwat Chauhan in Bengaluru; Editing by Vijay Kishore)
