Closing post
A highly volatile week in the market is now over.
It’s been a tough few days for the pound, which has fallen by 2.3% against the US dollar so far this month, to around $1.222 tonight.
UK bonds have been pounded too – Reuters calculated earlier that 10-year gilt yields have risen more than 28 basis points this week, the biggest weekly rise since May 2023.
Those losses were driven by concerns over the UK’s fiscal outlook, as well as international influences.
And it was the latter that hit UK markets this afternoon, after stronger-than expected US jobs figures triggered volatile conditions in global financial markets.
In an accelerating global bond market sell-off, investors warned that the UK was particularly exposed amid growing fears over stubbornly high inflation and higher for longer interest rates. Almost 700,000 UK homeowners are facing an increase in mortgage costs when their fixed-rate deals end this year.
At the end of a turbulent week in global markets, bond yields rose sharply for governments worldwide, before falling back, after the last jobs report of the Biden administration showed the US labour market grew strongly in December.
In other news… the UK government has insisted the country has enough gas and electricity to meet demand this winter.
The pledge came after the owner of the country’s largest gas stores said levels had become “concerningly low” amid the current cold snap.
Centrica, which also owns British Gas, said on Friday that its inventories had fallen by half since early November, to a quarter below where gas storage levels were at the same time last year when temperatures were milder than normal.
The company blamed the decline to less than a week’s worth of gas – its full storage is the equivalent of 12 days of average use – on the early start to a colder than normal winter across the UK and high prices in the global wholesale market.
FTSE 100 falls almost 1%
Britain’s blue-chip share index has closed for the week, down almost 0.9% today.
The FTSE 100 share index fell 71 points to finish at 8248 points.
Financial group Schroders was the top faller, down 4.3%, followed by Sainsbury’s (-4.2%), drinks firm Diageo (-4.2%) and insurer Beazley (-4.2%).
