Daily market update: FTSE falls after Bank of England warning, Intel, Mondi

An official from the Bank of England has warned of a potential global stock market correction.

Deputy governor for financial stability Sarah Breeden told the BBC that current share prices didn’t reflect economic pressures facing the markets.

The stock market reflects what investors think will happen in the future. While markets have been wobbly since the Middle East conflict unfolded, they didn’t pull back sharply in the early stages of the crisis, and more recently they’ve shown resilience. That suggests investors are confident the war will end quickly, and elevated oil and gas prices will retreat as supply is restored.

Oil prices currently trade at $105 per barrel which is higher than the sub-$70 price seen at the start of 2026, but below the $120+ level when Russia invaded Ukraine in 2022. One could argue current oil prices are high enough to cause pain for businesses and consumers as everything becomes more expensive. There are already signs it is causing problems for companies as they report cautious outlook statements.

Central banks such as the Bank of England will be watching key data points around inflation and the jobs market to see if interest rates need to change. It’s a tough call as a swift resolution to the Middle East could mean that an inflation spike is only temporary, and that monetary policy may not need to go down a different path. But wait too long to respond and central banks could face criticism that once again they didn’t act fast enough.

It's unusual for a Bank of England official to explicitly warn about a potential stock market pullback, and the comment might have contributed to some of the FTSE 100's decline on Friday.

Breeden wasn’t simply referring to the Middle East events – she also referenced concerns around a private credit crunch, high equity valuations and AI. 

While these have all been worry points for investors in recent months, markets have wobbled and then regained their poise. That suggests investors aren’t blind to potential problem areas, instead it implies they’re comfortable with the risks and that they believe any problems can be contained.

It’s important to remember there is always noise and something for investors to weigh up. Investors often climb the ‘wall of worry’ which is when financial markets rise even though there are pockets of anxiety. Against a backdrop of uncertainty, the slightest bit of good news can fire up investors to put more money into the markets. The wall of worry collapses when fear becomes reality, or investors become too complacent and are caught off guard.

Intel

There’s beating earnings expectations and then there’s smashing them – with no hint of hyperbole, it’s fair to say Intel has done the latter with its latest quarterly results.

Pre-market trading saw the stock finally beat the all-time highs seen in the dotcom boom as Intel benefits from AI.

Chief executive Lip-Bu Tan is strident in asserting that Intel is seeing a big boost as businesses move beyond just training up machines and begin putting them to work on specific tasks. This means increasing demand for ‘Intel inside’ as customers tap its flagship central processing units.

For years Intel has looked like yesterday’s man in the chip space, but the company’s latest earnings suggest it has caught up – helped by an unconventional investment from the Trump administration and additional funds from Nvidia last year.

Now, the main issue seems to be in ramping up capacity to a sufficient level to meet customer demand. This may be an obstacle to sustaining the current soaraway momentum in earnings and the share price.

Mondi

There’s no papering over the cracks in packaging outfit Mondi’s latest update. The business is heavily exposed to rising energy and raw materials costs and that’s putting significant pressure on profit.

Mondi is increasing its prices but cannot pass on costs overnight so investors won’t see evidence of this until later in the year. 

Management can take some credit for an increase in volumes which suggests Mondi is making progress on items within its compass to control.

Around the turn of the last decade a combination of the burgeoning ESG theme – where packaging firms like Mondi were popular picks thanks to their recycling efforts – and the e-commerce boom seen during the pandemic saw the share price hit heights which feel very distant today.

Mondi is now down more than 60% over the last five years as demand has eased back and the company has battled waves of inflationary pressure. The immediate outlook suggests Mondi will have to run hard just to stand still.