London midday: FTSE flat as government borrowing costs hit multi-year highs

18th Aug 2026 11:34

(Sharecast News) - London stocks had pared earlier small gains to trade flat by midday on Tuesday as investors mulled the latest UK jobs data and as government borrowing costs hit multi-year highs amid worries about inflation and the impact of the Iran war.

The FTSE 100 was steady at 10,724.06, while Brent crude was flat at $90.87 a barrel and West Texas Intermediate was 0.6% higher at $84.98.

The 60-day memorandum of understanding between the US and Iran expired on Monday, with both sides rejecting any potential extension. In addition, Trump told Fox News on Monday that the US would bomb Oman if it gets in the way of ending the war.

The US and Oman have been negotiating separately with Tehran to reopen the vital Strait of Hormuz.

Dan Coatsworth, head of markets at AJ Bell, said: "Efforts to bring an end to the war have not been successful, and reports suggest Iran will now become more aggressive. That raises the risk of further disruption to oil supplies out of the Middle East, hence why inflation fears and potential interest rate hikes are front of mind for investors. This scenario is negative for equities as it can dampen risk appetite.

"Central banks typically raise interest rates when inflation rises above target, which generally puts downward pressure on company valuations. Higher interest rates can also lead to higher bond yields and make fixed-income assets more attractive to investors relative to riskier assets such as equities.

"In the US, the 30-year Treasury yield reached a 19-year high of 5.33%. In the UK, the 30-year gilt traded at 5.85% - the highest level since May this year. Rising long-dated bond yields are not driven solely by expectations of higher interest rates and inflation fears. They can also reflect concerns around high levels of government borrowing and investors demanding greater compensation for the risks of holding long-dated government bonds."

On home shores, figures from the Office for National Statistics showed the unemployment rate was unchanged in June, while earnings growth in the private sector slowed and vacancies were at their lowest in more than five years.

The unemployment rate unexpectedly remained at 4.9% in the three months to June, versus expectations for a dip to 4.8%. Meanwhile, vacancies fell by 6,000 to 707,000 - the lowest level since 2021.

Liz McKeown, director of economic statistics at the ONS, said: "Vacancies remain broadly flat, though a small fall in the latest period puts them at the lowest level in more than five years.

"The latest decrease was driven mainly by smaller businesses, which cite labour and operating costs as reasons for not hiring new staff or replacing leavers."

Growth in total earnings, including bonuses, fell to 4.1% in the three months to June from 4.3% in the three months to May. Economists had been expecting a decline to 4%. Pay growth excluding bonuses ticked up to 3.5% from 3.4%, versus expectations for it to be unchanged.

Regular wage growth in the private sector fell to a six-year low of 2.8% in the three months to June from 2.9% in the previous quarter, while public sector pay was up 6.1%, having risen 5.5% in the previous three months.

Liz McKeown said: "Regular wage growth has remained broadly stable in recent months. However, private sector pay growth has continued to ease, while public sector pay growth remains elevated due to the timing of the latest NHS pay awards."

ING economist James Smith said "the basic story here is that the jobs market is cool".

"We can see that in the vacancy numbers, which are still gradually falling and are well down on pre-Covid levels," he said. "We can see that in the unemployment rate, notwithstanding the latest reliability issues. And crucially for the Bank of England, there is little sign that wage growth is about to turn higher.

"Barring a severe and persistent spike in energy prices, we think the Bank will keep rates on hold until next spring, before cutting rates at least twice in 2027."

In equity markets, BP and Shell were among the risers on the FTSE 100, while Premier Inn owner Whitbread was boosted by an upgrade to 'market perform' from 'underperform' at Bernstein, which said it was "time to adopt a more constructive stance".

IT services provider Kainos surged to the top of the FTSE 250 as it said full-year revenue and adjusted pre-tax profit were set to be "comfortably ahead" of current market expectations.

Market Movers

FTSE 100 (UKX) 10,724.06 0.04%

FTSE 250 (MCX) 24,644.97 -0.24%

techMARK (TASX) 6,158.43 0.17%

FTSE 100 - Risers

Relx plc (REL) 2,511.00p 2.39%

BP (BP.) 529.30p 1.91%

BT Group (BT.A) 202.00p 1.87%

Whitbread (WTB) 2,471.00p 1.60%

The Sage Group (SGE) 1,060.50p 1.58%

Vodafone Group (VOD) 121.40p 1.50%

Autotrader Group (AUTO) 533.60p 1.48%

IG Group Holdings (IGG) 1,395.00p 1.46%

Shell (SHEL) 3,374.00p 1.35%

Experian (EXPN) 2,835.00p 1.32%

FTSE 100 - Fallers

Halma (HLMA) 3,624.00p -2.16%

Barratt Redrow (BTRW) 315.60p -2.08%

Fresnillo (FRES) 2,871.00p -1.98%

Land Securities Group (LAND) 691.00p -1.84%

Antofagasta (ANTO) 3,551.00p -1.80%

Persimmon (PSN) 1,150.00p -1.46%

Scottish Mortgage Inv Trust (SMT) 1,430.00p -1.45%

Lion Finance Group (BGEO) 13,130.00p -1.43%

Barclays (BARC) 509.00p -1.36%

Metlen Energy & Metals (MTLN) 48.72p -1.22%

FTSE 250 - Risers

Kainos Group (KNOS) 1,195.00p 22.88%

AEP Plantations (AEP) 186.60p 4.11%

Ocado Group (OCDO) 242.40p 3.41%

Frasers Group (FRAS) 820.00p 3.21%

Ithaca Energy (ITH) 250.70p 2.49%

GB Group (GBG) 165.20p 2.22%

Diversified Energy Company (DI) (DEC) 1,062.00p 1.72%

OSB Group (OSB) 513.50p 1.68%

Trustpilot Group (TRST) 280.80p 1.59%

GCP Infrastructure Investments Ltd (GCP) 84.00p 1.57%

FTSE 250 - Fallers

Raspberry PI Holdings (RPI) 640.00p -5.81%

Ceres Power Holdings (CWR) 415.60p -3.97%

Pacific Horizon Inv Trust (PHI) 1,094.00p -3.19%

JPMorgan Japanese Inv Trust (JFJ) 834.00p -3.14%

Polar Capital Technology Trust (PCT) 666.50p -2.92%

Telecom Plus (TEP) 881.00p -2.65%

Templeton Emerging Markets Inv Trust (TEM) 314.00p -2.64%

Baillie Gifford Japan Trust (BGFD) 1,042.00p -2.62%

Hochschild Mining (HOC) 513.00p -2.57%

Oxford Instruments (OXIG) 2,876.00p -2.51%