FTSE 250 hits one-month low as yields and oil rise

The FTSE 250 fell 0.8% to its lowest level since early August on Wednesday as rising 10-year gilt yields, higher oil prices and renewed US–Iran tensions weighed on investor sentiment in London. The domestically focused mid-cap index led declines while the FTSE 100 slipped 0.56% to 10,728.90 points by mid-morning.

A global rout in sovereign bonds followed fresh strikes between the US and Iran, pushing yields sharply higher. The 10-year UK gilt yield reached its highest level since June 2008. Higher government borrowing costs make equities less attractive for investors, particularly companies valued on future growth.

Brent crude traded around $95 a barrel as markets priced the risk of disruption to key Middle East shipping routes. Higher energy prices raised input costs for businesses and may reduce consumer spending power.

The selloff affected a range of sectors. The basic resources group fell 1.2% as copper and zinc weakened on a stronger dollar, dragging miners lower; Rio Tinto and Glencore fell about 1.3% and 1% respectively. Media stocks dropped about 2%, led by advertising group WPP which declined 2.8%. Education company Pearson fell 2.5% after Citigroup downgraded the stock to neutral from buy.

Matthew Ryan, head of market strategy at Ebury, warned the rise in yields increases pressure on the UK government’s fiscal position and may raise the likelihood of future tax increases if spending commitments remain high. Higher borrowing costs will increase debt-servicing bills.

The British Chambers of Commerce expects the economy to grow slightly faster in 2026 after absorbing the initial impact of the Iran conflict, but businesses remain cautious about new investment. Central banks face slower growth alongside persistent price pressures intensified by higher energy costs.