The FTSE 100 rose for a third straight session on Tuesday as easing pressure in global bond markets and gains in healthcare stocks helped London extend its rebound from last week’s selloff.
The blue-chip index climbed about 0.6% in early trade after gaining 0.34% on Monday and 0.32% on Friday.
AstraZeneca advanced around 2%, giving the index an important lift, while the broader STOXX 600 also moved higher.
The rebound follows a bruising week in which the FTSE 100 fell 2.2%, its steepest weekly decline since April, as UK gilt yields surged and investors reassessed equities against government bonds.
Bond pressure eases but has not disappeared
The immediate relief is coming from the bond market. Euro-zone yields eased on Tuesday after a sharp rise driven by fiscal concerns in France and political uncertainty in Spain, while the extreme pressure seen across European sovereign debt last week has moderated.
The underlying problem remains. The UK 10-year gilt yield had climbed above 5.4%, its highest since 2007, while the 30-year yield briefly exceeded 6% for the first time since 1998.
Russ Mould, investment director at AJ Bell, wrote that rising gilt yields have become a direct competitor to FTSE 100 income.
He noted that the 10-year gilt yield was more than two percentage points above the index’s expected 2026 dividend yield, although the FTSE’s earnings yield of about 7.4% still left equities with a valuation case.
AstraZeneca gives the FTSE 100 a heavyweight boost
AstraZeneca’s roughly 2% gain provided the strongest single-stock support on Tuesday.
The pharmaceutical group carries a large weight in the FTSE 100, meaning moves in the stock can materially influence the index.
Healthcare strength also helped Europe. The STOXX 600 gained about 0.8%, with the sector up roughly 1.6% as Denmark’s Genmab surged after positive late-stage blood-cancer trial results.
Germany’s DAX, France’s CAC 40, Italy’s FTSE MIB and Spain’s IBEX 35 also opened higher.
That matters for London because the FTSE 100 is relatively defensive and internationally exposed. A calmer bond market and softer oil prices can support large healthcare, consumer and industrial names even when the domestic economy remains uneven.
UK inflation risk still limits the upside
The biggest reason not to declare the bond shock over is inflation.
S&P Global’s UK services PMI came in at 52.1 for September, above the flash estimate of 51.7 but down from 52.5 in August.
More importantly, firms reported the sharpest increase in selling prices since May as fuel and wage costs rose.
Tim Moore, economics director at S&P Global Market Intelligence, said in comments carried by The Independent that higher fuel costs had reversed some of the easing in service-sector inflation seen earlier this year.
RSM UK chief economist Thomas Pugh said the renewed price pressure strengthens the case for further Bank of England tightening later this year.
The FTSE 100 has now risen for three sessions, and the worst of the forced bond-market selling may be passing.
But with gilt yields still historically high, mortgage costs elevated and UK inflation pressures reappearing, the rebound is not yet proof that the risk has cleared.
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