LONDON, May 17, 2026, 18:03 (BST)
FTSE 100 stumbles, UK stocks start week on back foot after Friday rout
The FTSE 100 logged its steepest drop in more than eight weeks on Friday as bond prices fell, the pound weakened, and investors grew jittery about UK politics possibly leading to looser fiscal policy. Inflation concerns linger with oil prices staying high. London’s stock market was closed on Sunday. The London Stock Exchange opens for regular trade at 8:00 a.m. and closes at 4:30 p.m. local time, Monday to Friday.
FTSE 100 closed at 10,195.37 on May 15, off 177.56 points, or 1.71%. The index is now down about 0.4% this week, pushing its weekly losing run to four. UK stocks are being squeezed between global-facing names that still trade at elevated valuations and a domestic bond market raising fresh concerns about inflation and the outlook for public finances.
FTSE 250 dropped on Friday, showing the decline wasn’t limited to global commodity stocks. Sterling touched a five-week low versus the dollar. Banks like Barclays and Lloyds lost over 2% intraday as investors cut exposure to UK-linked assets.
Political worries sparked the move. Markets were nervous about talk that Greater Manchester Mayor Andy Burnham might go for a parliamentary seat, which could set him up to run against Prime Minister Keir Starmer. That raised concerns about higher spending and more borrowing. Neil Wilson, investor strategist at Saxo UK, said markets aren’t keen on the idea of a left-leaning prime minister with Burnham’s fiscal and bond views.
Gilts took the spotlight Friday, with 10-year yields spiking more than 17 basis points to 5.166%. That put them on pace for their steepest daily rise since April 2025. Yields climbed as high as 5.179%, marking the highest since July 2008. A basis point equals one-hundredth of a percentage point. Higher yields mean lower bond prices.
The focus goes back to the numbers this week. The Office for National Statistics will post labour-market data on Tuesday, inflation figures for April on Wednesday, and retail sales on Friday. Investors are watching these releases closely as they track wage growth, prices, and demand to gauge if the Bank of England will keep rates on hold or move them higher.
Economists largely see the Bank of England keeping Bank Rate at 3.75% through this year, according to a Reuters poll from last week. Still, almost 40% of respondents now look for at least one hike by the end of 2026. Goldman Sachs analysts said it wouldn’t take much for the BoE to act this summer if energy costs stay high. HSBC’s Elizabeth Martins said her central view has now shifted “from the good to the bad.” Reuters
UK stocks are facing inflation head on. CPI inflation hit 3.3% in March, up from 3.0% in February, the ONS said. Motor fuels gave the biggest boost to the monthly reading. CPI, or the consumer prices index, is the main measure for household inflation.
Brent crude gained over 2% Friday, Reuters said, with traders nervous about tensions near Iran and risk to the Strait of Hormuz shipping route. The price jump leaves oil as a wild card for the UK, which imports energy. Rising oil costs can push up fuel prices, pressure household budgets, and make things harder for the Bank of England.
Company news is back in focus. IG’s week-ahead calendar shows full-year results from Big Yellow and Kainos due Monday, Cranswick reporting Tuesday, then Severn Trent, Marks & Spencer and British Land out on Wednesday. Thursday brings Tate & Lyle, Great Portland Estates, Qinetiq and BT. Investors now want to see if UK consumer names like Marks & Spencer hold margins as costs climb and shoppers get more careful.
Deal news stood out in the market. Shares in Hiscox surged Friday following reports that Canada’s Intact Financial might make a bid for the Lloyd’s of London group. Overseas interest wasn’t limited to Hiscox—Tate & Lyle said it had received a £2.7 billion approach from Ingredion in the U.S., while Intertek said it was prepared to back a £10.6 billion offer from EQT.
The market is starting to price in a few negatives at the same time, but not the worst-case outcomes yet. Calmer gilt trading, softer inflation data, or stronger retail sales could help steady UK stocks. If oil goes up again, the next CPI is higher, or there are more signs of political drift in Westminster, that would put new pressure on banks, retailers, housebuilders and utilities—sectors that are most exposed to shifts in UK rates and household spending.
