LONDON MARKET OPEN: FTSE falls as Burnham comeback jitters hit gilts

Fri, 15th May 2026 09:18

(Alliance News) - Stock prices in London opened sharply lower on Friday, as political turmoil in Westminster and renewed inflation fears rattled markets.

The FTSE 100 index opened down 79.36 points, 0.8%, at 10,293.94. The FTSE 250 was down 209.96 points, 0.9%, at 22,618.11, and the AIM all-share was down 6.96 points, 0.9%, at 810.16.

The Cboe UK 100 was down 0.7% at 1,023.24, the Cboe UK 250 was down 1.0% at 19,548.60, and the Cboe small companies was down 0.1% at 18,274.48.

Investor sentiment was also shaped by developments in Asia, where US President Donald Trump departed Beijing on Friday after two days of wide-ranging talks with Chinese President Xi Jinping covering Iran, Taiwan, trade, oil and Boeing.

The summit, marked by pomp, produced statements from both sides.

According to Chinese state media, Xi said the US and China had agreed to pursue “strategic stability” as a framework for the next three years.

Trump, speaking to Fox News, said China had agreed to buy US oil and would purchase 200 aircraft from Boeing. He also invited Xi to visit the White House on September 24, signalling that trade discussions will continue beyond this week.

Brent oil was quoted at USD107.49 a barrel early in London on Friday, up from USD104.92 late Thursday.

Meanwhile, ceasefire talks with Iran appeared to stall. US Vice President JD Vance said on Wednesday that lead US negotiators were still “making progress” in peace discussions with Tehran, despite what he described as a series of unsatisfying responses in recent weeks.

Vance stressed that the administration remains focused on ensuring Iran can never obtain a nuclear weapon.

Back in the UK, markets were in a frenzy as political instability intensified following last week’s local elections, in which Labour suffered significant losses. The prospect of a challenge to Prime Minister Keir Starmer has dominated headlines and unsettled investors.

Starmer faces a potentially drawn-out leadership contest after Greater Manchester Mayor Andy Burnham said he wanted to contest an upcoming by-election in order to return to Westminster.

Burnham can only challenge for the Labour leadership if he is an MP, and Makerfield MP Josh Simons has said he would resign to make way for him.

On Thursday, Health Secretary Wes Streeting resigned, saying he had “lost confidence” in Starmer’s leadership.

Gilt markets reacted sharply. UK government bonds fell as investors weighed both renewed inflation concerns and the possibility of Burnham gaining a pathway to challenge Starmer.

The British 10-year gilt was quoted at 5.100% on Friday morning, jumping from 4.992% at the close on Thursday. It touched a day high of 5.119%.

Barclays strategists said periods of political uncertainty have become a “default setting” in gilt markets, with the latest episode triggered by the local election results.

Investors are wary that a successor to Starmer could shift policy to the left, potentially increasing public spending and pushing borrowing costs higher.

Streeting is widely seen by gilt investors as the least disruptive option, viewed as a continuity candidate likely to adhere to Labour’s current fiscal rules. Burnham, by contrast, is regarded by some as a greater risk, particularly after comments last year that the country should not be “in hock” to the bond market.

Sterling has also taken a significant hit from developments in Westminster. The pound was quoted at USD1.3365 early Friday, lower than USD1.3480 at the London equities close on Thursday. Against the euro, sterling fell to EUR1.1479 from EUR1.1549 a day prior.

European yields were also rising across the board as oil prices climbed, with inflation fears emerging as a central theme of the day. Bank of England rate expectations moved in tandem with those in Europe, with traders now pricing 68 basis points of hikes for 2026.

In European equities on Friday, the CAC 40 in Paris was down 0.9%, while the DAX 40 in Frankfurt was down 1.0%.

The euro traded at USD1.1636 early Friday, lower than USD1.1677 late Thursday. Against the yen, the dollar was quoted at JPY158.43 versus JPY158.14.

Back in London, 3i Group was the top winner in the FTSE 100, up 3.7%.

At the other end of the blue-chip index, miners Fresnillo, Antofagasta and Anglo American recorded the steepest losses, down 5.6%, 5.4% and 4.6% respectively, reflecting pressure on the sector.

Centrica lost 2.5% after saying its British Gas unit has agreed to pay GBP20 million into Ofgem’s Voluntary Redress Fund after the regulator closed its investigation into historic involuntary prepayment meter installations.

Ofgem said British Gas failed to meet required standards in its treatment of vulnerable customers between 2018 and 2023, including cases where prepayment meters were installed under warrant when it was inappropriate to do so. British Gas will compensate affected customers from the 2018-21 period, in addition to payments already made for 2022-23, and will write off up to GBP70 million of energy debt for vulnerable customers.

Centrica said it has not restarted warrant-based prepayment meter installations since suspending the practice in February 2023 and added that the settlement will not affect its 2026 financial guidance.

Miners were also the biggest drag in the FTSE 250, with Atalaya Mining down 5.5% and Hochschild Mining down 5.0%.

Among smaller caps, Metals One jumped 23% after signing a deal with DISA Technologies to evaluate an abandoned uranium mine in the US.

The company said the asset under evaluation is the Uravan project in Colorado. Under the agreement, DISA will advance the exploration work, with Metals One not required to fund any operating expenditure related to the programme.

In Asia on Friday, the Nikkei 225 index in Tokyo closed down 2.0%. In China, the Shanghai Composite ended down 1.0%, while the Hang Seng index in Hong Kong closed 1.6% lower. The S&P/ASX 200 in Sydney finished down 0.1%.

In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.8%, the S&P 500 up 0.8% and the Nasdaq Composite up 0.9%.

The yield on the US 10-year Treasury was quoted at 4.54%, widening from 4.46%. The yield on the US 30-year Treasury was quoted at 5.09%, widening from 5.01%.

Gold was quoted at USD4,562.295 an ounce, lower against USD4,688.75 on Thursday.

Still to come on Friday’s economic calendar are Ireland’s trade balance, Canada’s manufacturing sales, the New York Empire State manufacturing index and US industrial production data.

By Eva Castanedo, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Commodities Forex Market News