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The FTSE 100 index started Tuesday’s session on a weak note, mirroring broader European markets, as rising borrowing costs and ongoing global economic uncertainty clouded investor sentiment.
The benchmark index slipped by 0.4% or 40.22 points to 9,156.12, with notable declines in consumer and tobacco stocks, while oil majors and select financials provided modest support. Let’s take a look at the updates from today’s FTSE 100 Live.
Among the fallers, British American Tobacco dropped nearly 2% to £4,071 after RBC analysts downgraded the stock with an “Underperform” rating and set a price target of £3,400. Imperial Brands also edged lower by £20 to £3,077, while Unilever slipped £29 to £4,635.
On the risers list, Barclays gained £2.3 to trade at £369.6, and Melrose Industries, owner of GKN Aerospace, added £2.8 to £593.6.
Energy stocks showed some resilience, with Shell and BP both increasing by nearly 1%, supported by an increase in Brent crude prices to $68.52 a barrel due to concerns related to supply disruptions stemming from the continued Russia-Ukraine conflict.
The Unilever PLC (+1.35%), Shell PLC (+1.27%), and Fresnillo PLC (+1.15%), showing that at least some defensive and commodity-linked stocks continued to draw in buyers.
The largest macro surprise weighing on the market was the large jump in Britain's long-term borrowing costs. Yields on 30-year UK government bonds hit 5.698%, the highest level since 1998, raising concern about the sustainability of public finances.
The sell-off in gilts also impacted sterling, which was down 1% at $1.34 versus the US dollar and fell 0.6% versus the euro to €1.15. The pressure has raised the stakes for Chancellor Rachel Reeves ahead of the autumn budget, as investors will want clarity on fiscal discipline.
Although equities struggled, gold continued its rally, reaching a new intraday high of $3,508 per ounce and a year-to-date increase of over 30%, as the best-performing major asset class in 2025.
Analysts at UBS forecast a base case of $3,700 by next June, with potential for $4,000 if geopolitical and economic risks escalate further.
Central banks have been major buyers of gold, while falling bond yields in some regions have reduced the opportunity cost of holding the zero-yielding asset. Silver has also gained momentum, crossing $40 an ounce for the first time since 2011.
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Despite the early setbacks, analysts have found that the FTSE 100 continues to find support from commodity-linked businesses such as Shell and BP, whose performance has compensated for weakness in consumer staples and tobacco.
Still, as borrowing costs continue to climb and currency markets are under stress, volatility will likely remain heightened in the coming weeks.
