Early market roundup: Shares fall; UK bond markets hit by PM turmoil

Stock prices in London were in the red on Tuesday morning amid uncertainty regarding the leadership of UK Prime Minister Keir Starmer; meanwhile the price of Brent oil was up amid tensions in the Middle East.

The FTSE 100 index opened down 46.69 points, 0.5%, at 10,222.59. The FTSE 250 was down 238.46 points, 1.1%, at 22,566.28, and the AIM all-share was down 5.11 points, 0.6%, at 817.30.

The Cboe UK 100 was down 0.5% at 1,016.94, the Cboe UK 250 was down 1.4% at 19,521.67, and the Cboe small companies was up 0.4% at 18,406.77.

In European equities on Tuesday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.7 %.

In the UK, political uncertainty rattled bond markets. Yields on 30-year UK government bonds climbed to their highest level since 1998, as pressure intensified on Prime Minister Keir Starmer to step down.

British government bonds are underperforming their European counterparts across the curve, reflecting concerns about the UK’s exposure to an energy shock as oil prices remain elevated, as well as mounting political risk.

The yield on the UK 10-year gilt was quoted at 5.102%, the highest level since 2008, up 10 basis points from 5.002% at the previous close. The day’s high stood at 5.115%.

Meanwhile, 30-year yields, where fiscal and political concerns are most clearly expressed, have reached levels not seen in nearly three decades.

Starmer is preparing to face his cabinet as he fights to remain in office. His party is in open revolt, and divisions have emerged within his cabinet over whether he should step down.

Home Secretary Shabana Mahmood has joined other ministers in calling for Starmer to set out a timetable for departure.

At least 72 Labour MPs have now urged him either to resign immediately or to announce a timeline for doing so. Senior minister Darren Jones dismissed speculation about a potential return of Manchester Mayor Andy Burnham as ‘fantasy politics’, telling the BBC that discussions about ‘strategy’ should take place ‘internally – as opposed to in public’.

The pound weakened amid the political tensions. Sterling was quoted at $1.3519 early Tuesday, lower than $1.3651 at the London equities close on Monday. Against the euro, sterling fell to €1.1510 from €1.1584 a day prior.

The euro traded at $1.1745 early Tuesday, lower than $1.1782 late Monday. Against the yen, the dollar was quoted at JP¥157.56, higher versus JP¥157.01.

Political risk spilled over into equity markets, with UK banks among the biggest fallers in the FTSE 100. Barclays dropped 3.7%, NatWest fell 3.6%, and Lloyds Banking Group was down 3.1%.

In the US, President Donald Trump said the Iran ceasefire was on ‘life support’ and that he was considering restarting US naval escorts through the Strait of Hormuz as he pushes for what he described as ‘complete victory’ in the conflict.

Speaking amid mounting pressure over the war’s economic impact, Trump said Iran’s rejection of Washington’s latest demands had left the already fragile ceasefire ‘unbelievably weak’. He told Fox News he was weighing a revival of Operation Freedom, a previous US initiative to escort commercial shipping through Hormuz, although no final decision has been made.

Iranian parliamentary speaker Mohammad Bagher Ghalibaf responded by saying Iran was prepared ‘for any eventuality’.

Brent oil was trading at $106.35 a barrel early Tuesday, up from $103.70 late Monday.

Trump also said he planned to suspend the federal gasoline tax as Americans grapple with surging fuel costs linked to the Iran conflict. Speaking at the White House, he said the measure would remain in place ‘till it’s appropriate’.

Back in London, Intertek Group topped the FTSE 100 leaderboard after suitor EQT Fund Management Sarl made what it described as its ‘final possible offer’ for the assurance, inspection, product testing and certification firm.

EQT’s final proposal values Intertek at £60 per share in cash, or £61.077 including a final dividend. Including the dividend, the offer values the company at £9.40 billion.

The proposal follows a £58.00 per share bid made on Friday, which valued Intertek at around £8.93 billion.

Intertek responded, saying it is reviewing the final proposal with its advisers and will make a further announcement in due course.

Vodafone fell 3.8% despite swinging to a pretax profit of €1.86 billion in the year ended March 31, from a €1.48 billion loss a year earlier, helped by higher revenue and the absence of impairment charges.

In financial 2025, Vodafone booked a €4.52 billion impairment charge, compared with none in financial 2026. Revenue rose 8.0% to €40.46 billion from €37.45 billion, driven by service revenue growth and the consolidation of Three UK, partly offset by foreign exchange movements.

Chief Executive Margherita Della Valle said: ‘After the transformation of the last three years, we are now a simpler company with a stronger growth outlook. Our strategic progress has generated good group service revenue momentum for the year, together with profit and cash flow at the upper end of our guidance range...We are now well set for mid-term growth.’

On the FTSE 250, Greggs was among the top performers after reiterating that expectations for the full-year outcome remain unchanged.

The bakery chain said it continues to target around 120 net openings for the full year. In the first 19 weeks of 2026, like-for-like sales rose 2.5%, while total sales increased 7.5% to £800 million.

In Asia on Tuesday, the Nikkei 225 index in Tokyo ended 0.5% higher. In China, the Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong finished 0.2% lower. The S&P/ASX 200 in Sydney closed down 0.4%.

In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.2% and the Nasdaq Composite up 0.1%.

The yield on the US 10-year Treasury was quoted at 4.43%, widening from 4.39%. The yield on the US 30-year Treasury was quoted at 5.00%, widening from 4.97%.

Gold was quoted at $4,702.77 an ounce early Tuesday, lower than $4,733.27 on Monday.

Still to come on Tuesday’s economic calendar, the eurozone and Germany will release ZEW economic sentiment surveys.

In the US, consumer price inflation, the Redbook index, the monthly budget statement and ADP employment change figures are due.

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