Business live blog, Tuesday August 26 — as it happened

Global financial markets experienced volatility following President Trump's attempt to remove Federal Reserve Governor Lisa Cook, which fueled concerns over central bank independence, leading to initial Wall Street declines, a weaker dollar, and rising long-dated US Treasury yields. Concurrently, Eli Lilly shares climbed on positive late-stage trial data for its GLP1 weight-loss pill, signaling a significant market opportunity. Elsewhere, the UK 30-year bond yield neared a 27-year high due to fiscal concerns, while French markets fell amidst political instability, and UK consumer spending forecasts prompted retailer downgrades.

Analysis

Global markets are navigating heightened political and monetary policy uncertainty, primarily driven by President Trump's call to remove a Federal Reserve governor, which has undermined confidence in the central bank's independence. This event triggered a risk-off sentiment, causing Wall Street's main indices to open lower, with the Dow Jones falling 0.1%, and pressuring the US dollar and long-dated Treasuries, pushing the 10-year yield up 1.8 basis points to 4.29%. The instability is mirrored in Europe, where France's CAC 40 index dropped 2% amid fears of a government collapse, and UK 30-year bond yields approached a 27-year high on fiscal concerns. Amid this macro volatility, company-specific catalysts are creating significant divergence. Eli Lilly shares rose 2.4% in premarket trading following a successful late-stage trial for its oral GLP-1 weight-loss drug, positioning it to compete in a market projected to reach $150 billion. Conversely, the UK consumer sector faces a starkly negative outlook, with Deutsche Bank downgrading retailers like Associated British Foods and Wickes, which fell 4.2% and 8.4% respectively, citing rising inflation eroding household spending power. Corporate actions are also key drivers; British American Tobacco shares fell 2.2% after its CFO's immediate departure, while Bunzl rose 4.78% by resuming a share buyback despite a 10% drop in interim profits. Meanwhile, M&A activity continues with the £2.4 billion takeover of Just Group, and Filtronic's shares surged 13% after securing a £47.3 million contract with SpaceX, demonstrating that specific fundamental developments are overriding broader market anxieties.

Key Decisions for Investors

• Given the elevated political risk surrounding the Federal Reserve's independence and European governmental stability, investors should re-evaluate sovereign risk exposure and consider increasing allocations to safe-haven assets like gold, which saw its price rise to $3,372.20 an ounce.
• Eli Lilly's positive trial data for its oral weight-loss drug presents a significant, company-specific growth catalyst; consider its potential to capture market share from injectable competitors in the lucrative obesity treatment space.
• Exercise caution with UK consumer discretionary stocks, as weakening disposable income and analyst downgrades are creating significant headwinds, evidenced by sharp share price declines in retailers like Wickes and Associated British Foods.
• Pay close attention to idiosyncratic corporate events, such as the management shake-up at British American Tobacco and Bunzl's capital return policy, as these are driving substantial short-term price movements independent of broader market trends.