The FTSE 100 closed down 1.71% at 10,195.37 on Friday, its worst single session in more than eight weeks and a fourth consecutive weekly decline. The FTSE 250 fell 1.02% to 22,596.14.
The trigger was political, with Labour MP Josh Simons announcing on Thursday evening that he would vacate his seat to open a parliamentary route for Greater Manchester Mayor Andy Burnham, a move widely interpreted as the opening step in a leadership challenge, coming as Health Secretary Wes Streeting had already resigned from government to position himself as a rival contender.
Sterling fell for a fourth straight session, with GBP/USD sliding to 1.3372 – putting the pound on course for its worst week against the dollar since November 2024, down almost 2% across five trading days. The 10-year gilt yield climbed to 5.17%, its highest since 2008, while 30-year yields hit a 28-year high of 5.85%.
The bond market interpretation is fairly direct. Burnham is on record saying Britain must stop being “in hock to bond markets” and has suggested placing defence spending outside the Chancellor’s fiscal rules, positions that investors see as a challenge to fiscal discipline.
Utilities take the worst of it
Utility stocks suffered their worst trading session in two years, with the sector falling by as much as 7.9%. Severn Trent led the losses, followed by United Utilities down 7.6%, National Grid off 7.1% and SSE shedding 6.7%.
The sector’s vulnerability is structural, with utilities carrying heavy long-term debt loads and relying on stable regulated returns, leaving them highly sensitive to any rise in gilt yields and doubly exposed when political pressure also brings the prospect of tighter regulation.
Miners reverse hard
The steepest individual falls came from mining stocks, with Fresnillo down 5.6%, Antofagasta off 5.4% and Anglo American shedding 4.6%. Miners had driven much of the index’s gains earlier in the week, making them an obvious source of profit-taking once sentiment soured.
The selling extended into the FTSE 250, where Atalaya Mining fell 5.5% and Hochschild Mining dropped 5.0%.
Centrica pays the price for British Gas scandal
Centrica agreed to pay £20 million into Ofgem’s voluntary redress fund and to compensate customers whose homes were broken into by debt collectors working for British Gas to illegally fit prepayment meters – in some cases targeting vulnerable people or those with disabilities. Including a broader debt write-off, the total bill came to around £90 million.
The company confirmed the settlement will not affect its 2026 financial guidance, though that did little to soften the blow on the day.
Hiscox bucks the trend on bid talk
Hiscox surged after Insurance Post reported that Canada’s Intact Financial – the country’s largest property and casualty insurer – is exploring a potential acquisition. Sources indicated Intact is targeting a major deal and that its chief executive has previously spoken highly of Hiscox.
The shares jumped 12.32%, making Hiscox the FTSE 100’s standout performer of the session. The insurer operates across specialist lines including art, cyber and professional indemnity, with a significant US presence through its Hiscox USA business.
Rate expectations shift
Bank of England rate expectations moved sharply with the gilt market, with traders now pricing 68 basis points of hikes for 2026. That shift adds another layer of pressure on growth-sensitive stocks and anything carrying significant debt loads.
BP and Shell offered some shelter, edging higher as oil prices rose on continuing supply disruption and reports that China may be interested in buying US crude. European markets also fell, though more modestly – the CAC 40 in Paris lost 0.9% and the DAX 40 in Frankfurt dropped 1.0%, neither carrying the specific political weight bearing down on UK assets.
The week ahead
With gilt yields at multi-decade highs and sterling under sustained pressure, UK markets enter next week carrying a meaningful risk premium. How quickly the political uncertainty around the Labour leadership either resolves or deepens will set the tone for the FTSE 100 – and right now, there is no obvious catalyst for it to settle.