The FTSE 100 is experiencing a turbulent start to the week, with a 15-point drop to 10,180, as housebuilders, travel, and mining sectors take a hit. The primary drivers of this decline are rising mortgage rates and weak Chinese economic data. The bond market is in a state of flux, with central banks anticipated to hike rates, and the US-Iran conflict adding to the uncertainty. The sell-off in sovereign bond markets is a significant concern, with yields rising and investors wary of the potential for a more pronounced equity market correction.
The Middle East conflict is a central theme, with oil prices climbing to $111 a barrel, and the prolonged conflict leading to a record decline in global oil reserves. This has a direct impact on mortgage rates, which are climbing sharply across Europe and North America. The US average 30-year mortgage rate has risen to 6.36%, and UK borrowers are facing steep increases, with the average two-year fixed mortgage rate at 5.1%.
The mining sector is also under pressure, with weak Chinese data hitting industrial production growth, retail sales, investment growth, and home prices. This is exacerbated by the lack of a peace deal in the Gulf, with the US-Iran war continuing to underscore the global economic stakes. The IEA warns of falling global oil inventories, and new drone attacks on critical infrastructure highlight growing regional security and supply risks.
In other news, Capita's trading in the first four months of 2026 is in line with expectations, with contracts won or extended exceeding £750 million. The company is continuing its restructuring efforts, including the sale of its private-sector call centre business. Anglo American has found a new buyer for its Australian coking coal business, agreeing to a sale price that could eventually rise to US$3.875 billion.
The FTSE 100 futures are expected to start the week in the red, with a 37-point drop anticipated. This is a result of the bond market rout, weak Chinese data, and the continued lack of a peace deal in the Gulf. The focus remains on developments in the Middle East and the bond market, with analysts warning of a potential sell-off in risk assets. The global economic stakes are high, and the market is reacting to a multitude of factors, leaving investors wary of the near-term risks.
