London’s blue-chip index is set to extend Monday’s losses as a combination of rising oil prices and political unrest in France rattles investor confidence.
The FTSE 100 suffered a bruising session on Monday, with pressure building across European markets as tensions on the continent continued to mount overnight.
A significant bond sell-off swept through Europe after France’s Prime Minister introduced a curfew to contain what authorities described as explosive riots spreading across the country.
The 10-year yield on French bonds, a direct reflection of the government’s cost to borrow, spiked around 13 basis points to 4.9 per cent.
The spread between French and German 10-year yields widened to its highest closing level since early 2012, as investors priced in the risk of ongoing unrest across the country.
That widening spread signals growing concern among bond markets about France’s political stability and the potential economic consequences of prolonged civil disorder.
Adding further pressure to already strained markets, oil prices were climbing towards the $110 per barrel mark, holding recent gains as investors assessed escalating conflicts.
Markets were weighing escalating conflicts in the Middle East and Eastern Europe against signs of robust energy flows from the Persian Gulf, keeping sentiment cautious.
Higher oil prices compound inflationary concerns that have already weighed heavily on European equities throughout recent months, making central bank policy decisions more complicated.
Wealthy investors have been responding to the broader uncertainty by accelerating gifting strategies amid fears of a Budget tax raid, according to separate reports circulating in the market.
Sir James Dyson has added his voice to debates around the UK’s economic future, calling for more technical universities to help young people not in education, employment, or training.
Business advisers have also raised alarms over what they describe as a family business tax raid, with one warning of potential disaster for succession planning across the sector.
In the technology space, Elon Musk and Anthropic have both sought to temper growing artificial intelligence backlash through separate billion-dollar giveaway initiatives aimed at demonstrating social responsibility.
Traders and investors will be monitoring developments in France closely throughout the session, with any escalation in unrest likely to put further upward pressure on French bond yields.