London pre-open: Stocks seen steady as borrowing costs in focus
By Michele Maatouk
Date: Wednesday 03 Sep 2025
(Sharecast News) - London stocks were set for a steady open on Wednesday following losses on Wall Street, with borrowing costs in focus after 30-year gilt yields hit a 27-year high a day earlier.
The FTSE 100 was called to open flat at 9,117.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "September didn't start on a positive note for global markets. Market sentiment was less than cheery as the US returned from its long weekend, and the selloff in long-maturity bonds in developed markets accelerated. The US 30-year yield flirted with the 5% psychological mark, Japan's 30-year yield pushed toward multi-decade highs, while the UK's 30-year gilt yield climbed to levels not seen since 1998.
"In France, the 30-year yield spiked to 4.5% for the first time since 2009, and the spread between German and French 10-year yields widened beyond 80bp - highlighting mounting concerns around France's budget standoff, where Bayrou's budget plans face stiff political resistance.
"The selloff in long-duration bonds is fuelled by several factors: concerns over ballooning sovereign debt, political hurdles to fiscal tightening (France is a case in point), and structurally higher inflation pressures following the Covid disruptions and the ongoing trade war. Investors are demanding higher returns to hold bonds exposed to both inflation risk and elevated debt levels. Higher yields, in turn, push up borrowing costs for companies and weigh on valuations. As a result, equities and corporate bonds also kicked off the week on a weak note."
In corporate news, Watches of Switzerland said it did not expect any material impact from US tariffs in the first half of fiscal 2026 as brand partners increased inventories.
In a trading update, the company held guidance despite US President Donald Trump slapping Switzerland with a shock 39% tariff on exports. WoS said trading had been consistently strong in the 18 weeks to 31 August.
Food manufacturer Hilton Food said it had delivered a "robust performance and further strategic progress" in the six months ended 29 June, despite "challenging" market conditions.
Hilton Food posted a 7.6% increase in interim revenue to £2.09bn, partly due to a 2.5% volume increase, while pre-tax profits ticked up 0.3% to £33.6m.
However, Hilton reported an adjusted free cash outflow of £30.8m, compared to a £30m inflow in H124, and net bank debt increased from £131.4m at year-end to £202.4m.
M&G reported steady profits for the first half, though the investment manager saw strong net flows from open business.
Adjusted operating profit before tax came in at £378m for the six months to 30 June, more or less unchanged from £375m the year before, as growth was held back a £8m FX loss in asset management.
However, net flows from open business totalled £2.1bn, a £3.2bn swing from the £1.1bn of outflows reported last year, helped by £2.6bn of net inflows from external clients in asset management.
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