The FTSE 100 index concluded a robust week on a slightly downward note, closing at 10,868.05 on Friday, 29 July 2026. Despite reaching an all-time intraday peak of 10,989.45 earlier in the day, investors opted to take profits as they responded to the upward trend in bond yields, reflecting broader economic concerns.
Market Overview
The blue-chip index experienced a decrease of 29.22 points, translating to a 0.3% dip. The FTSE 250 followed suit, closing down 104.12 points, or 0.4%, at 23,975.02. In contrast, the AIM All-Share index saw a slight decline of 2.35 points, also equivalent to 0.3%, finishing at 762.55. Over the week, the FTSE 100 enjoyed a gain of 1.2%, while the FTSE 250 rose by 0.7%. However, the AIM All-Share index saw a decline of 1.2%.
Trading commenced positively in London with the FTSE 100 threatening to breach the 11,000 milestone, yet the optimism waned as the day progressed.
NatWest’s Positive Outlook
NatWest Group emerged as a standout performer, surging by 3.2% after announcing an upgrade to its guidance for 2026. The bank also indicated the potential for a new share buyback programme, set to be discussed at its upcoming annual results—six months ahead of schedule—following a second-quarter performance that exceeded expectations.
Russ Mould, investment director at AJ Bell, remarked that this marks the fifth consecutive occasion NatWest has surpassed consensus forecasts since the UK government divested its remaining stake in May 2026. He attributed the bank’s consistent outperformance to both a favourable interest rate environment and its strategic initiatives.
IG Group Faces Heavy Losses
In stark contrast, IG Group faced significant setbacks, plummeting 14% to become the worst performer on the FTSE 100. Investors reacted unfavourably to the company’s announcement of a $1.3 billion acquisition of Underdog, a US fantasy sports and prediction markets operator. Despite reporting a revenue increase of 18% to £642.8 million for the first half of 2026, concerns lingered about the potential implications of this acquisition.
Meanwhile, J Sainsbury saw a 1.0% uptick after confirming the sale of its Argos business for £120 million, a considerably lower figure than its initial investment. This divestment aims to allow Sainsbury to concentrate fully on its core food operations, with JPMorgan analyst Borja Olcese noting that Argos had been a longstanding burden for the retailer.
Bond Yields and Economic Sentiment
As market participants weighed corporate news, attention shifted to the rising bond yields that have characterised recent trading sessions. Following comments from Federal Reserve policymakers advocating for immediate rate hikes to combat inflation, the yield on the US 10-year Treasury rose to 4.74%, up from 4.67% the previous day. In the UK, the yield on 10-year gilts also saw a notable increase, climbing to 5.05%.
The Federal Reserve maintained its interest rates within the 3.50-3.75% range for the fifth consecutive meeting, despite dissenting opinions advocating for a quarter-percentage-point increase. Beth Hammack, president of the Cleveland Fed, expressed concern over persistent inflation levels, while Neel Kashkari of the Minneapolis Fed suggested a cautious approach to policy adjustments as further economic data becomes available.
The pound traded at 1.3463 dollars, reflecting a slight gain, and rose to 1.1702 euros against the euro.
Looking Ahead
Chancellor John Healey is set to present his inaugural budget on 28 October, promising to decentralise financial power from Westminster and provide much-needed stability for businesses and families.
European markets mirrored the UK’s performance, with the CAC 40 in Paris and the DAX 40 in Frankfurt closing up 0.3% and 0.1%, respectively. In the US, the Dow Jones Industrial Average rose by 0.2%, while the S&P 500 and Nasdaq Composite remained flat.
Apple faced a challenging day, dropping 9.3% after cautioning that supply constraints and foreign exchange pressures may hinder revenue growth in the upcoming quarter. In contrast, Amazon thrived, reporting a remarkable 13% surge following strong results from its cloud division, with CEO Andy Jassy highlighting a significant year-over-year growth of 36.7%.
Why it Matters
The fluctuations in the FTSE 100, alongside the varying performances of key corporations, reveal the intricate interplay between market sentiment and economic indicators like bond yields. The rising interest rates, driven by inflationary pressures, potentially signal a more volatile economic landscape ahead. Investors must navigate these complexities, balancing corporate performance with macroeconomic realities, as they position themselves for future growth amidst uncertainty.
