Lunchtime market roundup: Stocks toil amid shaky bond markets

European shares were mostly lower in uneasy trade on Tuesday, with bond yields spiking as an oil price rise stoked inflation concern.

The FTSE 100 index was up just 2.47 points at 10,722.77.

The FTSE 250 fell 67.85 points, 0.3%, at 24,636.55. The AIM all-share was down 3.59 points, 0.5%, at 797.16.

The Cboe UK 100 was down 0.1% at 1,065.29, the Cboe UK 250 was 0.1% lower at 21,437.10 and the Cboe small companies was also down 0.1% at 19,078.30.

In European equities on Tuesday, the CAC 40 in Paris was down 0.5%, and the DAX 40 in Frankfurt 0.3% lower.

Iran's top negotiator Mohammad Bagher Ghalibaf said on Tuesday that the strategic Strait of Hormuz will not be opened until the US meets Tehran's demands, including lifting a naval blockade.

"I want to state clearly that the Strait of Hormuz will not be opened until the American commitments stipulated in the memorandum of understanding... are implemented," Ghalibaf said in a speech broadcast on state television. He listed the removal of the blockade, the lifting of oil sanctions and unfreezing of Iran's assets abroad among the demands.

A barrel of Brent surged to USD90.97 midday Tuesday, from USD89.07 at the time of the London equities close on Monday.

Analysts at Deutsche Bank commented: "Markets have seen growing weakness over the last 24 hours, with bonds and equities slipping thanks to negative geopolitical headlines from the Middle East. There wasn't a single catalyst for the declines, but with few signs of the US and Iran coming to any sort of a deal, that meant investors priced in a more extended closure of the Strait of Hormuz.

"Inflation concerns helped send long-end bond yields up to fresh multi-year highs, with the 30yr Treasury yield closing at a post-2007 high of 5.31% [on Monday], whilst Germany's 30yr yield hit a post-2011 high of 3.74%."

Treasury yields pushed even higher on Tuesday. The yield on the 10-year US Treasury widened to 4.74% on Tuesday afternoon from 4.71% late Monday afternoon. The 30-year yield stretched to 5.33% from 5.29%.

The German 30-year yield stretched to 3.78%, while the UK counterpart sat at 5.84%, its loftiest level since May.

Analysts at Rabobank commented: "Bond yields across the world are displaying increasing unease.

"This morning, the US 30 yr yield has surged further to the highest level since 2007, with various other G10 bond yields also making multi-year highs. Indeed, JGB yields are close to 30 year highs, though yields on the 5-year JGB fell after a strong auction today. If the pressure on global bonds continues, it could be a test of its safe haven status."

Hurt by simmering inflation worry, London-listed housebuilders were on the decline. Barratt Redrow lost 2.0%, Vistry declined 1.5% and Persimmon fell 1.4%.

The pound fell to USD1.3528 on Tuesday afternoon, from USD1.3557 at the time of the London equities close on Monday. Versus the euro, sterling fell to EUR1.1682 from EUR1.1702.

The euro traded at USD1.1576 on Tuesday, fading from USD1.1586 late Monday. Against the yen, the dollar picked up to JPY159.69 from JPY159.34.

The UK unemployment rate was steady at the end of the second quarter, underperforming expectations of a decrease.

The Office for National Statistics said the UK unemployment rate was 4.9% in the three months to June, unchanged from the three months to May. However, it had been expected to ease to 4.8%, according to consensus cited by FXStreet.

Analysts at Barclays commented: "The labour market data continues to suggest that the employment picture is not deteriorating dramatically, but nor is it improving.

"The unemployment rate for June was 0.1pp above the BoE forecast from the July MPR, but still supportive of further gradual loosening of the labour market over the next year in line with the latest MPC forecasts. Wage growth was in line with the July MPR forecast, reinforcing the current MPC assessment of the degree of second-round effects from the energy shock."

In New York, the Dow Jones Industrial Average is called to open flat, the S&P 500 down 0.5% and the Nasdaq Composite 1.3% lower, with tech shares looking set to be the worst hit by Tuesday's nervy trade.

But Home Depot was 1.7% higher in pre-market dealings as the retailer reported second-quarter earnings and sales that exceeded its expectations, as customers continued to spend on smaller home improvement projects.

The home improvement products seller said net earnings in the quarter ended August 2 rose 4.7% to USD4.77 billion from USD4.55 billion a year earlier. Net sales climbed 5.7% to USD47.86 billion from USD45.28 billion.

Eyes now turn to Walmart which reports on Thursday, after TJX on Wednesday. TJX operates the TJ Maxx discount department store chain in the US, and counterpart TK Maxx in nations including the UK.

In London, Kainos shares shot up 23%. It raised its revenue and earnings guidance, as it said sales momentum from financial 2026 has continued into the new financial year.

London-based Kainos provides IT support to customers across three divisions: Digital Services, Workday Services, and Workday Products.

It said the double-digit percentage revenue growth and record order backlog that it achieved in the financial year that ended March 31 has continued into financial 2027. As a result, it said its annual results will be "comfortably ahead" of current market expectations.

Kainos cited these as adjusted pretax profit of £75.0 million to £84.0 million on revenue of £498.0 million to £514.0 million. This would be up from £67.1 million and £431.1 million in financial 2026.

Frasers was up 3.1%, while over in Frankfurt, Hugo Boss was down 0.4%. Hugo Boss said it looks forward to maintaining a "constructive relationship" with Frasers, after the Shirebrook, England-based retailer increased its holding in the German fashion house to nearly 48%.

The Metzingen, Germany-based fashion company said it appreciates Frasers Group's continued long-term commitment as its single largest shareholder.

Earlier, Frasers Group, which owns House of Fraser, Sports Direct and Flannels brands, said it had received valid acceptances for 12.2 million Hugo Boss shares, just shy of 18% of its share capital, as it pursued a voluntary public takeover offer to acquire Hugo Boss.

It means that Frasers owns, or has received acceptances, for just under 48% of Hugo Boss shares, falling short of majority control.

Among AIM listings, Made Tech shares surged 12%. It said it expects to report revenue and adjusted earnings ahead of market expectations after landing the "largest contract award in the company's history".

The provider of digital, data and technology services to the UK public sector said it is part of a consortium that has won a "significant new four-year contract with a UK government department".

The deal is worth over £40 million to Made Tech across its four-year span, and Chief Executive Rory MacDonald said it is the "largest contract award in the company's history".

Gold fell to USD4,397.74 an ounce midday Tuesday, from USD4,423.12 at the time of the London equities close on Monday.

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