The FTSE 100 reversed early losses to close in positive territory on Wednesday after the US Treasury announced plans to significantly increase buybacks of longer-dated bonds.
The blue-chip index ended the session up 15.31 points, or 0.1%, at 10,743.35, while the FTSE 250 gained 82.09 points, or 0.3%, to close at 24,643.52.
The AIM All-Share also rose, adding 7.29 points, or 0.9%, to finish at 801.54 as the Treasury announcement rippled across global markets.
The US Treasury said it would increase bond buybacks “by at least double,” citing a “desire to provide greater liquidity support in longer-dated” bonds, covering the 10-year to 30-year sector.
The current maximum size of two billion dollars per operation will rise to at least four billion dollars per operation, providing a significant injection of liquidity into longer-dated debt markets.
The move came after yields on the 30-year US bond hit a 19-year peak on Tuesday, with bond yields climbing sharply across global markets and raising fears among investors.
In response, the yield on the US 10-year Treasury narrowed to 4.66% on Wednesday from 4.72% at the London equity close on Tuesday, and the 30-year yield fell to 5.20% from 5.30%.
In London, the yield on 10-year gilts eased to 5.05% from 5.08%, and the 30-year gilt yield fell to 5.79% from 5.85%, providing some relief to UK markets.
On Wall Street, stocks also advanced, with the Dow Jones Industrial Average up 0.4%, the S&P 500 gaining 0.5%, and the Nasdaq Composite rising 0.4%.
Moderna shares more than doubled and Merck jumped 11% after the companies announced encouraging trial results for their experimental melanoma vaccine, called intismeran autogene, which showed “statistically significant and clinically meaningful improvements” for skin cancer patients when used alongside Merck’s Keytruda treatment.
JPMorgan analyst Chris Schott noted that the companies believe the vaccine could receive US Food & Drug Administration approval as early as 2027, and described intismeran autogene as another potential “multi-billion” product for Merck.
Back in London, investors digested UK inflation data showing the Consumer Price Index rose 2.9% in the 12 months to July, accelerating from 2.6% in June, according to the Office for National Statistics.
Barclays analyst Jack Meaning said the acceleration was driven by increased energy and core goods inflation, offset by weakening services and food inflation, with energy inflation jumping to 9.8% on-year from 5.7% in June.
Mr Meaning said the data was unlikely to alter the Bank of England’s Monetary Policy Committee outlook, adding that “the key risk to the outlook continues to come from developments in the Middle East escalating, rather than domestic dynamics.”
Oil prices stayed elevated after US President Donald Trump said he would not extend a 60-day truce with Iran, with Brent crude for October delivery trading at 92.40 dollars a barrel, up from 91.17 dollars on Tuesday.
Gold miners surged on the FTSE 100 as a weaker dollar pushed bullion to 4,483.13 dollars an ounce from 4,361.38 dollars on Tuesday, with Fresnillo rising 7.8% and Endeavour Mining climbing 7.5%.
On the FTSE 250, Oxford Nanopore jumped 14% after reporting its pre-tax loss narrowed to £44.9 million in the six months ended June 30, from £69.0 million a year earlier, driven by gross profit growth and a 6.9% year-on-year reduction in adjusted operating costs.
Citigroup analyst Veronika Dubajova said she views “the better-than-expected progress on narrowing Ebitda loss as a meaningful confidence boost for the market in Oxford Nanopore’s ability to break even next year.”
Trainline plunged 14% after the UK Competition and Markets Authority launched an investigation into drip pricing, focusing on concerns that customers are not shown total ticket prices upfront, with analysts at Stifel warning “the investigation is likely to weigh on the shares until it is resolved.”
IG Group shares fell 4.4% as UBS slashed its price target for the stock to 1,700p from 2,200p, citing market concern over risks associated with the company’s 1.3 billion dollar acquisition of Underdog.