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UK's FTSE 100 Rises After Inflation Data; Barratt Redrow Leads

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UK shares recovered Wednesday, with the FTSE 100 index 0.34% higher at closing, as investors digested fresh inflation data ahead of the Bank of England's interest rate decision.

The country's inflation rate in August increased to 3.1% from 2.9% in July, in line with expectations, according to the Office for National Statistics. Core inflation was unchanged at 2.6%. The rise in headline inflation was driven largely by higher transport costs, particularly motor fuels.

"Rising energy prices were the sole explanation for the step up in UK CPI inflation from 2.9% yoy in July to 3.1% yoy in August, in line with the consensus and our own forecast. Although the increase left inflation stronger than the 2.8% yoy rate the BoE predicted, the jump in energy prices that caused the forecast error is out of their control. The inflation data continues to show few signs of a broader increase in prices that indicates a risk of inflation persisting after the energy price shock fades," Berenberg said, adding that it recently predicted a November rate hike due to higher energy prices.

Separate ONS data showed producer input prices rose 6.1% year over year in August, accelerating from a revised 5.8% increase in July, while output prices increased 3.7% after rising 3.3% in July. The annual retail price index also increased to 3.4% from 3.2%.

On the corporate front, Barratt Redrow (BTRW.L) was the strongest gainer among FTSE 100 constituents, rising 11.07% at market close, after the homebuilder reported higher revenue and attributable profit for the 52 weeks ended June 28. It completed 17,667 homes, up 5% from the prior year.

"Barratt delivered FY2026 in line with expectations following the detailed July trading update. However, the real focus today will be the outlook for FY2027, and today the Group is cutting guidance: completions trimmed to 17,500-17,900 (from 17,700-18,200) and outlets cut again to c.405 (from c.415) confirming that planning delays continue to frustrate growth ambitions," RBC Capital Markets said.

Meanwhile, Entain (ENT.L) gained 0.16% as the sports betting and gambling company said it plans to cut 400 customer-care roles as part of changes to its operations. The company has started a consultation process, while Chief Executive Stella David separately warned Prime Minister Andy Burnham that a proposed increase in the UK machine games duty rate to 40% could lead to significant job losses and betting-shop closures across the sector.

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Update: US Equity Indexes Retreat as Benchmark Bond Yield Hits 19-Year High Ahead of Fed Rate Increase While Crude Oil Prices Jump

(Updates with index/price moves, comments and geopolitical news from the first paragraph.)US equity indexes fell as the 10-year Treasury yield touched a 19-year high amid near certainty that the Federal Reserve will increase interest rates, and crude oil surged as the war against Iran draws in Saudi Arabia.The Nasdaq Composite fell 0.8% to 25,981.57, the S&P 500 declined 0.5% to 7,585.73, and the Dow Jones Industrial Average dropped 0.6% to 52,093.11 on Tuesday.All sectors except energy and materials fell, with consumer discretionary leading decliners."Stocks are falling basically everywhere but not by much, and on rate and inflation fears plus AI fears either having to do with concern about slowing momentum or the cheery news from AI researchers that all profits will go to zero by decade's end," Derek Holt, head of capital market economics at Scotiabank, said in a note.The Federal Reserve kicked off its two-day monetary policy meeting on Tuesday. Ahead of the Fed's announcements on Wednesday, interest rate traders are now pricing in a 95% probability that the central bank will raise its target rate by 25 basis points, up from 33% a month ago, according to the CME FedWatch tool.Morgan Stanley expects another interest-rate increase in December, following a move up on Wednesday, and then a pause, as the US investment bank anticipates inflation will moderate, according to a research note."We see arguments for both a hike and a hold, but signs of second-round effects from energy prices, strong demand tied to AI-related investment, a neutral rate that is possibly temporarily higher, and concerns about credibility mean the balance of risks now argues for a somewhat more restrictive policy," the research note said. "We expect the [Summary of Economic Projections] to show a median of two hikes this year followed by one cut each in 2027 and 2028."The US Treasury's 20-year auction hit a high yield of 5.420% on Tuesday, up from 5.204% in the previous auction, further evidence that the government is paying more for its borrowings. The bid-to-cover ratio was 2.57, up from 2.53 in the previous auction.Most US Treasury yields were higher in the final leg of trading. The 10-year yield jumped 4.5 basis points to 5.01%, earlier touching 5.04%, the highest since 2007. The two-year yield advanced 3.9 basis points to 4.67%.Saudi Arabia issued security alerts over a range of territory on Tuesday, including in the holy city of Mecca and the second-largest city, Jeddah, following a week of attacks from Iran-aligned fighters that have drawn it deeper into the Middle East war, Reuters reported. The Iran-aligned Houthis in Yemen have carried out attacks on Saudi Arabia over the past week, including strikes on an air base on Monday, the news agency said.The front-month US West Texas Intermediate crude oil contract surged 4.4% to $105.88 per barrel, and the global benchmark North Sea Brent jumped 2.8% to $108.61 per barrel.Gold futures fell 0.4% to $4,334.5, and silver futures were steady at $64.13.President Donald Trump's acknowledgment that he expects the war to end after the midterms, and winter creeping closer, may be prompting financial markets to reassess this geopolitical deterioration, Walt Chancellor, an energy strategist at Macquarie, said in a note.

Dow JonesNasdaq CompositeS&P 500
Asia Markets

Update: US Equity Indexes Decline as Benchmark Treasury Yield Hits Highest in Almost Two Decades, Crude Oil Jumps

(Updates with index/price moves and company/geopolitical news from the first paragraph.)US equity indexes fell as the 10-year Treasury yield touched a 19-year high ahead of a widely anticipated interest rate increase and after crude oil jumped.The Nasdaq Composite fell 0.7% to 25,997.3, the S&P 500 declined 0.4% to 7,586.1, and the Dow Jones Industrial Average dropped 0.8% to 52,001.7 after midday Tuesday. All sectors except energy and materials retreated. Consumer discretionary and communication services led decliners.The Federal Reserve kicked off its two-day monetary policy meeting on Tuesday. Ahead of the Fed's announcements on Wednesday, interest rate traders are now pricing in a 93% probability that the central bank will raise its target rate by 25 basis points, up from 33% a month ago, according to the CME FedWatch tool.Morgan Stanley expects another interest-rate increase in December, following a move up on Wednesday, and then pauses as the US investment bank anticipates inflation will moderate, according to a research note."We see arguments for both a hike and a hold, but signs of second-round effects from energy prices, strong demand tied to AI-related investment, a neutral rate that is possibly temporarily higher, and concerns about credibility mean the balance of risks now argues for a somewhat more restrictive policy," the research note said. "We expect the [Summary of Economic Projections] to show a median of two hikes this year followed by one cut each in 2027 and 2028."Most US Treasury yields rose. The 10-year yield jumped 4.9 basis points to 5.01%, earlier touching 5.04%, the highest since 2007. The two-year yield advanced 2.5 basis points to 4.66%.Yemen's Iran-aligned Houthis launched a new wave of attacks on Saudi Arabia and were digging into positions on the western coast of Yemen along the Red Sea, Yemeni officials said, as urgent deliberations took place in Riyadh over how to respond to their lightning advance, according to a Reuters news report.Iran's semi-official Fars news agency reported that the Iran Revolutionary Guards Corps has shot down another US-developed MQ-1 drone over Hormuz, Al Jazeera, a Middle Eastern broadcaster, said. This is the third such drone downed in the area on Tuesday, the report said, citing the IRGC.The front-month US West Texas Intermediate crude oil contract surged 4.5% to $105.96 per barrel, and the global benchmark North Sea Brent jumped 3.1% to $108.76 per barrel.Gold futures fell 0.4% to $4,336.9, and silver futures slipped 0.3% to $63.95.In company news, Axon Enterprise (AXON) slumped 11%, the worst performer on the S&P 500, after the company said it intends to offer $1 billion of 0% convertible senior notes due 2031 in a registered public offering.Goldman Sachs' (GS) asset management alternatives unit has raised $11.7 billion across its newest private equity funds and other vehicles, Reuters reported Tuesday, citing a statement and an interview with an executive. Goldman shares declined 2.8%, the worst performer on the Dow.

Dow JonesNasdaq CompositeS&P 500$AXON$GS
Asia Markets

Exchange-Traded Funds, US Equities Fall After Midday

Broad-market exchange-traded funds IWM and IVV were lower. Actively traded Invesco QQQ Trust (QQQ) fell 0.6%.US equity indexes declined after the 10-year benchmark government bond yield hit a 19-year high and crude oil jumped as a Tehran-aligned militia group continues to pull Saudi Arabia into the Iran war.EnergyIShares US Energy ETF (IYE) and the State Street Energy Select Sector SPDR (XLE) gained 2%.TechnologyThe State Street Technology Select Sector SPDR ETF (XLK) shed 0.1%, while iShares US Technology ETF (IYW) and iShares Expanded Tech Sector ETF (IGM) declined 0.3% each.The State Street SPDR S&P Semiconductor (XSD) advanced 0.8%, while iShares Semiconductor (SOXX) fell 0.1%.FinancialThe State Street Financial Select Sector SPDR (XLF) dropped 0.8%. Direxion Daily Financial Bull 3X Shares (FAS) was 2.6% lower, and its bearish counterpart, Direxion Daily Financial Bear 3X Shares (FAZ), rose 2.5%.CommoditiesCrude oil gained 4.2%, and the United States Oil Fund (USO) was 3.5% higher. Natural gas increased 0.5%, and the United States Natural Gas Fund (UNG) advanced 1.2%.Gold on Comex declined 0.4%, and the State Street SPDR Gold Shares (GLD) rose 0.3%. Silver dropped 0.4%, and iShares Silver Trust (SLV) increased 0.9%.ConsumerThe State Street Consumer Staples Select Sector SPDR (XLP) declined 0.7%. The Vanguard Consumer Staples ETF (VDC) was down 0.6%, and iShares Dow Jones US Consumer Goods (IYK) fell 0.5%.The State Street Consumer Discretionary Select Sector SPDR (XLY) was 1.2% lower. The VanEck Retail ETF (RTH) dropped 1.6%, and the State Street SPDR S&P Retail (XRT) dipped 2.1%.HealthcareThe State Street Health Care Select Sector SPDR (XLV) and iShares US Healthcare (IYH) were 0.1% higher each, and Vanguard Health Care ETF (VHT) was fractionally lower, while iShares Biotechnology ETF (IBB) was down 0.9%.IndustrialThe State Street Industrial Select Sector SPDR (XLI) was 0.2% lower. The Vanguard Industrials Index Fund (VIS) decreased 0.1%, and iShares US Industrials (IYJ) fell 0.3%.CryptocurrencyIn midday activity, bitcoin (BTC-USD) decreased 3.1%. Among cryptocurrency ETFs, ProShares Bitcoin ETF (BITO) dropped 3.4%, ProShares Ether ETF (EETH) shed 4.8%, and ProShares Bitcoin & Ether Market Cap Weight ETF (BETH) was up 1.9%.

Dow Jones^EEM^EXI^FAS^FAZ^GLD^IBB^IGM^IGV^IPK^IVV^IWMNasdaq Composite^IYE^IYH^IYJ^IYK^IYW^PMR^QQQ^RTH^SOXXS&P 500^SPY^UNG^USO^VDC^VHT^VIS^XLE^XLF^XLI^XLK^XLP^XLV^XRT^XSD$BETH$BITO$EETH