Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

UK borrowing costs rise, then dip, as pressure grows on Starmer; Japan’s Nikkei hits record high after Takaichi’s election win – as it happened

Sanae Takaichi Japan United States ING LDP ECB
A trading floor in the City Of London.
A trading floor in the City Of London. Photograph: Paul Painter/Alamy

Closing post

Time to recap.

It’s been a volatile day in the UK bond market as pressure has built on Sir Keir Starmer.

UK borrowing costs rose in early trading as traders reacted to Sunday’s resignation of the prime minister’s chief of staff, Morgan McSweeney, over the decision to appoint Peter Mandelson as ambassador to Washington.

Bond yields rose further after the Downing Street communications director Tim Allan resigned on Monday morning….

… and long-term borrowing costs touched their highest level since November, after it was reported that Anas Sarwar, the Scottish Labour leader, was calling on Starmer to stand down as prime minister and Labour leader.

But! Yields then dropped back, after a flurry of supportive messages from government ministers, indicating that Starmer has not lost the cabinet’s support.

The pound fell against the euro, but was stronger against the US dollar.

Japan’s stock market has hit a record high after Sanae Takaichi’s Liberal Democratic party (LDP) secured a comprehensive victory in Sunday’s election.

Japan’s Nikkei share average rose to a record high on Monday, after the election result, surpassing the 56,000 level for the first time at the start of trading. It quickly pushed through the 57,000-point mark, before closing up 3.9% at 56,363 points.

In other Asian markets, South Korea’s Kospi rose 4.4%, Hong Kong’s Hang Seng gained 1.8%, and Australia’s S&P/ASX 200 was 1.9% higher.

On the currency markets, the yen initially fell 0.3% against the dollar – its weakest level in two weeks – before strengthening as much as 0.7%. It was last trading 0.5% firmer at 156.43 yen against the dolla

Sterling extended losses against the euro this afternoon, nearing a year-to-date low as news emerged that Scottish Labour leader Anas Sarwar called on prime minister Keir Starmer to resign, reports Neil Wilson, investor strategist at Saxo UK:

It should be noted that Sarwar is not an MP and therefore has no direct mechanical influence on the Parliamentary Labour Party in Westminster. And Downing Street is standing firm, reiterating Starmer’s five-year mandate from the general election. Yet it underscores the precarious situation the prime minister is facing.

Starmer is due to speak to Parliamentary Labour Party at 6pm, which could be a pivotal moment if he is to survive this week. It follows the resignation of the PM’s chief of staff over the weekend and director of communications today.

The market is worried about a) political uncertainty with a vacuum at the top against a backdrop of acure economic and geopolitical challenges, and b) that any replacement of the Starmer-Reeves regime would be from the left, implying more spending and potentially unwinding all the fiscal repairs carried out at the last Budget. Incidentally, it’s this fear of an attack by bond vigilantes that just might save the PM, though it’s looking increasingly less likely he will survive as Labour leader by the May elections.

Energy secretary Ed Miliband, and Scottish secretary Douglas Alexander, have also voiced support for Starmer:

Yields dip back after cabinet support for Starmer

UK borrowing costs have dropped back from their earlier highs, after that chorus of support from members of the cabinet for Keir Starmer.

Yields are still higher than on Friday, suggesting investors still see British debt as slightly riskier.

But, the yield on 10-year UK bonds is now up by 4 basis points, having been 7bps higher earlier. 30-year bond yields are also up 4bps, reversing around half of their earlier jump.

Updated

Sky News are reporting that British health minister Wes Streeting has said Keir Starmer did not need to resign, and that the prime minister should be given “a chance”.

Supportive fire has come in from John Healey, the Secretary of State for Defence, too:

Chancellor Rachel Reeves has voiced her support for the embattled PM:

UK borrowing costs have dipped back a little, after deputy prime minister David Lammy and housing minister Steve Reed both pledged their support publicly for Prime Minister Keir Starmer in posts on X:

Anas Sarwar, the Scottish Labour leader, is holding a press conference now, where he is calling for the leadership in Downing Street to change.

Andrew Sparrow’s Politics Live blog is covering all the action:

"Fears of more left-wing government" hit pound

The pound is continuing to drop against the euro too.

Sterling is now down two-thirds of a eurocent at €1.1447.

Enrique Diaz-Alvarez, chief economist at global financial services firm Ebury, blames “fears of more leftwing Labour government”, and rising expectations of further cuts to UK interest rates:

Diaz-Alvarez says:

Fears about the future of Keir Starmer’s leadership returned last week due to fallout from the Epstein scandal. Combined with the Bank of England’s apparent dovish turn, this made for a rough week for sterling.

“We expect that the MPC’s dovish rhetoric will affect the timing of cuts more than their total size, and the terminal rate will see little change. It now appears to be a coin-toss between the March and April meetings, with a total of two rate reductions largely priced in by swap markets.

“The tone from economic releases has also taken a positive turn over the last few weeks.

“Overall, we think the recent drop in the pound fairly reflects the risks associated with an end to Starmer’s leadership. However, the risk of a leftist turn in the government, particularly under an Angela Rayner led Labour Party, presents downside risks to the pound and British assets generally.”

Updated

UK bond yields rise further, with Scottish Labour leader to call on Starmer to stand down

UK borrowing costs are pushing higher, as pressure continues to mount on Keir Starmer.

The yield, or interest rate, on 10-year government bonds is now up 7 basis points (0.07 percentage points) to 4.59%, as gilt prices continue to drop.

That’s close to the two and a half-month high touched last week.

30-year bond yields are now up almost 8 basis points to 5.41%. That’s the highest level since mid-November, just before Rachel Reeves’s budget.

Yields have pushed higher following news that Anas Sarwar, the Scottish Labour leader, is to call on Keir Starmer to stand down as prime minister and Labour leader.

The yen is continuing to strengthen against a generally weaker US dollar.

Japan’s currency is now up 0.7% at ¥156.1 to the US dollar, up from ¥157.2 on Friday night.

That’s despite predictions that Japan’s fiscal policy will now become more looser and more expansionary.

Daniele Antonucci, chief investment officer at Quintet Private Bank, explains:

Japan’s snap election delivered one of the largest parliamentary majorities in decades, sharply reducing near-term political uncertainty.

The scale of the mandate increases the likelihood that fiscal policy will become more expansionary over the coming quarters.

Unlike past stimulus episodes, the focus is likely to be targeted, with spending aimed at strategic sectors such as AI, semiconductors and defence.

That raises the probability of higher public investment and stronger incentives for private-sector capital expenditure.

Japanese equities have reacted positively, particularly in technology, machinery and defence-linked names.

This adds to Japan’s relative equity outperformance we’ve seen over the past few months though at the same time valuations have now become more demanding.

At the same time, expectations of looser fiscal policy are putting renewed downward pressure on the yen.

Today’s impressiver near-4% jump on the Japanese stock market follows some strong gains in recent months, points out Russ Mould, investment director at AJ Bell:

“Japanese shares rallied after Sanae Takaichi’s landslide election win. Investors are excited at the prospect of economic stimulus measures and the prime minister’s desire to drive corporate investment in the tech space.

“Japan’s Nikkei 225 has risen 68% since April 2025 amid a weaker yen, which makes the country’s exports more competitive from a price perspective, and a shift in the political backdrop. That’s an unusually large movement for an equity index in such a short period.

Eurozone upturn begins as investor confidence rises

Encouraging news from the eurozone, where investor confidence has risen.

The Sentix index measuring investor morale in the euro zone, released this morning, rose for the third month running to its highest level since July 2025.

The index rose to 4.2 points in February from -1.8 the month before, beating forecasts by analysts polled by Reuters for a reading of 0.0.

Sentix says:

“The recession in the euro zone appears to have come to an end and an upturn seems to have begun.”

A top Warner Bros Discovery executive has said he is “confident” that Netflix will keep its HBO Max streaming service, home to hit content such as Game of Thrones and Succession, despite uncertainty about the future ownership of the US film and TV giant.

JB Perrette, who runs WBD’s global streaming and games operations, is forging ahead with the long-awaited launch of HBO Max in the UK & Ireland on 26th March as Netflix and Paramount Skydance continue to battle for control of WBD.

“The one thing that is very clear in public statements from Ted [Sarandos] and Greg [Peters, co-chief executives of Netflix] - and this is 15 to 20 years in the making - they have talked about HBO many years ago as ‘could they get to be HBO before HBO became them’,” he said, speaking at the launch event for HBO Max UK&I.

“They have an enormous amount of respect and appreciation for the HBO brand in exactly the way we are defining it. It is distinct, premium, must-watch, different from mass volume [models].”

WBD’s board of directors has unanimously backed Netflix’s $82.7bn (£61.5bn) all-cash deal, while rival Paramount is attempting to derail the agreement with a $108.4bn takeover offer that it is trying to win support for directly from shareholders.

In the US, critics of the Netflix deal argue that buying HBO Max, which has around 60 million US subscribers, would give it too much power.

However, in a number of key markets, notably the major European countries where WBD had to unwind longstanding HBO deals with Sky, the HBO Max streaming service has only just launched.

The UK - where the service will include TNT Sports content such as Premier League and Champions League football migrated from WBD’s Discovery+ app - is the last major world market to see the launch of HBO Max.

“These rollouts where someone could say ‘why are you rolling out, you are selling the company?’,” said Perette.

“The reality is Netflix want the brand to be vibrant, dynamic, to be stronger and to be visible. I can’t say exactly what they want to do with it. But I am confident… having it in this market and actually having a more broad following, not just an industry following which is where it has been residing in Sky, is very helpful to their strategic ambitions as opposed to something that is contradictory to that.”

Perette said that by the end of March, when the service has launched in the UK & Ireland, HBO Max will have been live in three of the big five European markets for less than 90 days.

In the UK the cheapest tier, Basic with Ads, will cost £4.99. However, WBD expects the most popular tier to be its £5.99 monthly subscription, Standard with Ads, which includes recent movies from Warner Bros.

Bloomberg have spotted that hedge funds are betting on more pound weakness as UK Prime Minister Keir Starmer’s future hangs in the balance.

They say:

Trading volume of euro-sterling options was the most elevated since 2019 on Feb. 5, according to data from The Depository Trust and Clearing Corp. The volume of call options, which gain if sterling weakens versus the euro, was 50% larger than that of put options, which increase in value if the pound rises.

Hedge fund flows into “euro-pound remained one‑way, with heavy topside buying,” said Thomas Bureau, global head of FX option trading at Societe Generale, referring to demand for call options following the market moves on Feb. 5.

“The pound has traded with EM‑style volatility, driven by global dollar strength and hypersensitivity to geopolitical headlines.”

The weakness in the UK bond markets today is arguably more to do with the Japanese election than Keir Starmer’s shaky-looking grip on power.

That’s because Sanae Takaichi is expected to turn to the bond markets to fund a new stimulus programme.

Economist Julian Jessop, a fellow at the free-market Institute for Economic Analysis (not a natural Starmer ally) explains on X:

Big LDP win in Japan’s elections already pushing up global yields in anticipation of even more borrowing).

Ooh, UK bond prices just fell a little more, as news broke that Keir Starmer’s director of communications Tim Allan has resigned.

That has pushed up the yield (or interest rate) on 10 and 30-year bond yields by four basis points (0.04 percentage points) – still a small move….

"No panic on financial markets about the stability of the UK government" (yet....)

There’s some excitable reporting out there this morning about the market reaction to Keir Starmer’s shaky grip on 10 Downing Street.

To reiterate, UK government borrowing costs are slightly higher, and the pound is marginally lower against the US dollar, and down about 0.4% against the euro (a more meaningful move, see earlier post).

But a two-basis point (0.02 percentage point) rise in UK gilt yields suggests investors are basically shrugging at the turmoil in Westminster.

Russ Mould, investment director at AJ Bell, says:

“Politics were front of mind for investors in the UK after the resignation of chief of staff, Morgan McSweeney.

Movement among government bonds and the currency suggests there is no panic on financial markets about the stability of the UK government.”

Updated

Back to Japan…. and Neil Newman, managing director and head of strategy at Astris Advisory Japan, has summed up the importance of Sanae Takaichi’s achievement in winning an absolute majority in Tokyo’s lower house:

“Overall, as the LDP has gone from a very weak government that really couldn’t do anything to an extremely strong government now with the supermajority of the lower house, they really could call the shots.”

Greggs' shares hit by fears weight-loss jabs could hit spending

UK bakery chain Greggs is under pressure, as analysts warn that the boom in weight-loss products could hit demand for its pasties, pies and sausage rolls.

Stockbroker Jefferies suggested last weekend that drugs such as Mounjaro and Wegovy may create an “enduring challenge” for Greggs and hamper growth (The Times have the story here).

Greggs are the top faller on the FTSE 250 index of medium-sized companies, down 4.2% this morning a 16.09p, down 72p.

Victoria Scholar, head of investment at interactive investor, says:

Greggs is suffering today, falling sharply after Jefferies cut the stock from a buy to a hold. The broker said that weight loss drugs like Mounjaro could create an ‘enduring challenge’ for the company.

Updated

InPost shares jump after takeover by FedEx and private equity-led consortium

Shares in parcel locker group InPost have surged by 13.5% after a consortium led by FedEx Corporation and private equity firm Advent has agreed to buy the company for €7.8bn (£6.8 billion).

The bidders have offered €15.60 a share for Polish-headquartered InPost, and have plans to expand further across the UK and Europe.

In the UK, the group is looking to more than double the locker points to 30,000 from 14,000 currently, while it also has 5,500 pick-up and drop-off points.

InPost’s shares have quickly jumped over the €15 mark.

European stock markets are also making a positive start to the new week.

The pan-European Stoxx 600 index has gained 0.27%, as last week’s fears over the impact of AI on software and data companies appear to ease off.

Updated

Japan’s election result is likely to encourage more selling of the yen, predicts Lee Hardman, currency expert at MUFG bank.

Hardman told clients this morning:

Yen weakness following the election result has been constrained by the heightened risk of intervention as USD/JPY moves back into the high 150.00s. Japan’s top currency official Atsushi Mimura warned that they are watching market moves with a high sense of urgency.

It followed comments from Finance Minister Satsuki Katayama who said after the election victory that she will communicate with financial markets on Monday if needed. She reiterated that “Japan and the Us have signed a memorandum of understanding, which stated that we can take decisive measures against rapid movements out of line with fundamentals. That certainly includes intervention”.

The ongoing threat of intervention has helped to dampen further yen selling after the lower house election although it remains vulnerable to further weakness if market participants remain concerned over policy direction going forward under Prime Minister Takaichi.

Updated

NatWest shares fall after buying Evelyn Partners

Shares in banking group NatWest have dropped over 5% after it agreed to buy Evelyn Partners, one of the UK’s biggest wealth managers.

NatWest will pay £2.7bn for Evelyn Partners, a move which will boost its wealth management arm

Evelyn Partners, formerly known as Tilney Smith & Williamson, controls about £69bn of client assets and offers financial planning and wealth management across the UK and Ireland.

The company traces its roots back to 1836 when Thomas Tilney created his eponymous stock brokerage in the City of London. Tilney was bought by Permira in 2014, before acquiring the 145-year-old Glasgow-based investment company Smith & Williamson in 2019, and rebranding to its current name three years later, my colleague Alex Daniel reports.

Updated

Pound hits two-week low after McSweeney resignation piles presure on Starmer

Sterling is dropping this morning after the resignation of Morgan McSweeney, Keir Starmer’s chief of staff, increased the pressure on the prime minister.

The pound has fallen by half a eurocent to €1.146, the lowest since 22 January.

It’s also marginally lower (-0.12%) against the US dollar, unwinding a smidgen of Friday’s rally.

UK bond yields are slightly higher, mirroring a move in US Treasuries.

The yield, or interest rate, on 10-year UK bonds is up two basis points at 4.539% (a small move, but one that pushes up the cost of Britain’s borrowing, slightly).

Mohit Kumar, economist at Jefferies, says:

In the UK, political pressure on PM Starmer is mounting which is weighing on UK assets

Sanae Takaichi has achieved Japan’s best-ever post-war election result, point out analysts at Unicredit:

The Japanese parliamentary election, held yesterday, saw an overwhelming victory for the Liberal Democratic Party. The party, led by Prime Minister Sanae Takaichi, won two thirds of the seats in the lower house, the best result for a single party since the end of the Second World War.

Japanese stocks performed well as Takaichi intends to pursue supportive fiscal policy. Japanese government bond yields edged slightly higher, while the yen gained ground after Japanese Finance Minister Satsuki Katayama reiterated her willingness to preserve the stability of the currency.

London’s stock market has opened higher too!

The FTSE 100 share index is up 41 points, or 0.4%, in early trading to 10,410 points, approaching the record high (10,481) set last week.

Precious metals producers Fresnillo (+3.4%) and Endeavour Mining (+3.1%) are the top risers, as gold prices rise this morning.

Other mining stocks are also rising, perhaps reflecting hopes that Japanese growth measures will boost demand.

The LDP party’s election landslide does not give Sanae Takaichi free reign to just spend, argues Sree Kochugovindan, senior research economist, at Aberdeen, explaining:

The LDP are fiscally conservative and Takaichi has been very mindful of bond investors.

The debt/GDP ratio has steadily declined since the pandemic and Takaichi’s latest fiscal and economic package will keep debt/GDP on that downward trend.

Capital Economics: Calm may be on the way for Japan’s markets

Thomas Mathews, head of markets, Asia Pacific, at Capital Economics, has predicted that “calm may be on the way for Japan’s markets now the election is out of the way”.

Mathews doesn’t expect a further sell-off in Japanese government bonds (JGBs) and also forecasts a stronger yen, saying:

Japan’s debt position is actually on a better trajectory than many other countries’. And with the election now out of the way, it’s not obvious to us that Takaichi actually will deliver significant extra fiscal stimulus.

Japan's bond yields rise, as debt market prepares to digest Takaichi's fiscal stimulus

The big, BIG, question is whether Japan’s bond market will support Sanae Takaichi’s economic stimulus plans.

So far today, the yield (or interest rate) on 10-year Japanese bonds has risen by 6 basis points (0.06 percentage points) to 2.282% as bond traders react to the news Takaichi’s LDP party and its coalition partner have won a supermajority in Tokyo’s upper house.

The yield on 30-year Japanese bonds has risen too, by 4bps, to 3.55%.

That indicates some jitters in the bond market about the prospect of more debt-fuelled spending as Takaichi tries to spur Japan’s economy and tackle its cost of living crisis.

Kathleen Brooks, research director at XTB, say Takaichi is now “untouchable”, adding:

Takaichi’s election bet has paid off, and she now has a clear mandate to pursue her agenda, which could have market ramifications. All eyes are on the bond market.

Takaichi, like Andy Burnham, is not in hock to the bond market. She has threatened to cut taxes and boost spending even though Japan’s debt to GDP ratio is 250%.

Japan’s FX chief: We're urgently monitoring the market after after Takaichi’s win

Japan’s top currency official has said the government remains on high alert as it monitors the foreign exchange market.

Atsushi Mimura, the finance ministry’s vice minister for international affairs, spoke out after the yen initially came under renewed pressure following prime minister Sanae Takaichi’s victory in Sunday’s snap election.

Mimura told reporters:

“As always, we are watching market developments with a high sense of urgency.

We remain in close communication with the market.”

Those comments will have helped the yen to strengthen, as markets will anticipate that Tokyo policymakers will act, if necessary, if the yen weakens too much (towards that ¥160/$ line in the sand).

Updated

Asia-Pacific markets are rallying across the board today, as traders anticipate a boost from a new fiscal spending programme.

South Korea’s KOSPI has surged by 4.4%, outpaced the Japanese Nikkei’s 3.9% rise. Hong Kong’s Hang Seng has gained 1.75%, and Australia’s S&P/ASX 200 is 1.85% higher.

Ipek Ozkardeskaya, senior analyst at Swissquote, explains why:

The good news is that Japanese Prime Minister Sanae Takaichi won — and won big — her bet in the weekend snap election. She pulled off a stunning victory, with her ruling Liberal Democratic Party (LDP) scoring a historic landslide and securing a two-thirds supermajority in the powerful lower house of parliament — even more if you include its coalition partner.

That gives her party its most dominant position in decades and a strong mandate to push through an expansive fiscal agenda, particularly benefiting defense and technology. This likely helps explain why South Korea’s Kospi rebounded nearly 4% today. Still, the tech rebound could face speed bumps ahead.

The yen is up 0.5% against the US dollar, at ¥156.40/$.

That may seen counter-intuitive, as Sanae Takaichi now has a green light to push through with her debt-funded expansionary policies.

Reuters suspects investors are taking profits after having bet against the yen in the run-up to the election. There’s also the possibility that Tokyo might intervene if the yen weakens closer to the ¥160/$ level.

Updated

Introduction: Japan's Nikkei hits record high and yen strengthens after Takaichi's election win

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Political drama will be on investors’ minds today, as they react to a landmark election in Tokyo and mounting pressure on UK prime minister Keir Starmer.

The yen has strengthened after Japanese prime minister Sanae Takaichi won a sweeping victory in Sunday’s election, ending a six-day run of losses.

The Japanese stock market has rocketed to a new high too, as investors welcome the prospect of more stimulus.

Takaichi’s Liberal Democratic party (LDP) has won an absolute majority in Japan’s lower house, and with her coalition partner, the Japan Innovation party, Takaichi now has a supermajority of two-thirds of seats.

This will smooth the way for Takaichi to push through a 21tn yen (£99bn) stimulus package, and her pledge to suspend Japan’s 8% sales tax on food for two years.

Those plans had rattled financial markets and caused currency volatility during the election campaign, but there’s now relief that Japan’s political uncertainty appears to be over.

ING say the LDP’s landslide victory in Japan is positive for risk assets, even though her policies could raise Japan’s borrowing levels even higher:

Prime minister Takaichi’s decision to leverage her popularity for her party turned out to be successful.

The landslide victory will reinforce her responsible but expansionary fiscal spending and a more Japan-focused foreign policy. Risk-on sentiment will dominate the market for now.

Japan’s Nikkei share average surged to a record high on Monday, after the election results, surpassing the 56,000 level for the first time at the start of trading. It quickly pushed through the 57,000 point mark, before closing up 3.9% at 56,363 points.

The agenda

  • Noon BST: European Central Bank chief economist Philip Lane gives lecture at Maynooth University

  • 4pm BST: ECB presidnt Christine Lagarde participates in plenary debate on the state of the EU economy and ECB activities in Strasbourg, France

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Jamie Lee Curtis recalls 'little family' with Robert Carradine in heartfelt tribute to late ex
Jamie Lee Curtis has paid tribute to David Carradine after his death, and opened up about the close bond their shared.
BANG Premier
BANG Premier
Obstructive sleep apnoea costs UK and US economies £137bn a year, research finds
Disease, which causes people to stop breathing while asleep, linked to increased risk of heart attack and stroke
The Guardian - UK
The Guardian - UK
Eileen Gu Shouldn't Be Surprised That Americans Are Mad at Her for Competing for China
Plus: How to win the medal count, and how Free Agent readers want to fix the Olympics
Reason
Reason
What Is 'Diecided'? The Alleged Epstein-Linked Code Stirring Online Theories — and Why Selena Gomez and Candace Owens Are Being Mentioned
Explore the intriguing 'diecided' term from Epstein's emails, its connection to Selena Gomez, and the rise of clone theories
International Business Times UK
International Business Times UK
Nearly half of Americans unaware of link between eating processed meat and colorectal cancer
Colorectal cancer is the second-leading cause of cancer deaths in the US
The Independent UK
The Independent UK
“A historically significant instrument directly tied to the evolution of modern funk”: The bass Bootsy Collins used to record a James Brown anthem has been listed on eBay
The Fender Jazz Bass bought at auction for $40,000, has now been listed on eBay for almost twice as much. But you’ll have to bid an extra $299 if you want the original strings
Guitar World
Guitar World
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.
Download on the AppStore Get it on Google Play