FTSE 100 ends lower amid Middle East tensions and surging US Treasury Yields

The FTSE 100 closed lower on Monday, reflecting the cautious sentiment gripping global markets due to continuing tensions in the Middle East and a surge in the yield on the 10-year US Treasury note.

The FTSE 100 index ended the day down 27.31 points, a 0.4% decline, settling at 7,374.83. In contrast, the FTSE 250 saw a modest increase of 26.26 points, or 0.2%, reaching 17,058.99. Similarly, the AIM All-Share index closed down 2.52 points, a 0.4% decrease, at 680.41.

Investor sentiment remained clouded by events in the Middle East, although fears were somewhat assuaged as tensions did not escalate as much as anticipated over the weekend. Meanwhile, concerns deepened as the yield on the 10-year US government bonds surpassed 5.0% for the first time since 2007, reflecting worries that the US Federal Reserve might need to maintain higher interest rates in the face of persistent inflation and a resilient economy. The yield later settled around 4.87%.

In the FTSE 100, pharmaceutical giant AstraZeneca faced a 2.6% drop following its announcement that its Enhertu treatment received approval from the European Commission for adult lung cancer patients. The drug demonstrated a 49% objective response rate and a median duration of response of 16.8 months in the Destiny-Lung02 trial. AstraZeneca also reported positive results from its Tropin-Lung01 phase 3 trial, showing that datopotamab deruxtecan improved progression-free survival compared to chemotherapy in patients with previously treated non-small cell lung cancer.

In the FTSE 250, geotechnical engineering firm Keller aw a 16% surge after announcing continued positive trading momentum in 2023. The company now anticipates its full-year underlying operating profit to exceed market expectations, with an estimated £132 million profit, reflecting a 22% increase from 2022.

Pharmaceutical company Indivior, headquartered in Virginia, rose by 5.2% after agreeing to settle a US multi-district Suboxone litigation case by paying $385 million. The lawsuit alleged that Indivior hindered generic competition for the opioid addiction treatment Suboxone, maintaining its market dominance.

However, housebuilder Vistry faced a 5.8% decline following its announcement of restructuring plans, including job cuts and a reduction in regional units. Vistry expects to achieve approximately £25 million in annualised cost savings as a result. Despite this, the company anticipates adjusted pretax profit in 2023 of £450 million, up from £418.4 million in 2022, excluding the impact of transitioning the Housebuilding business to Partnerships. Rival companies, Persimmon and Taylor Wimpey, experienced marginal losses, while Barratt Developments gained 1.5%.

In the small-cap sector, Tirupati Graphite shares surged by 25% after China, the world’s leading graphite producer, imposed new export restrictions on the substance. This move, following the US’s restrictions on high-tech microchips, has significantly impacted the global market for electric vehicle batteries.

On AIM, building services firm Northern Bear witnessed a 28% surge following its announcement of a tender offer to return £3.1 million to shareholders. The company’s Non-Executive Chair, Jeff Baryshinik, will sell his shares before retiring after a general meeting in mid-November.