TLDR
- The FTSE 100 fell 0.60% on Tuesday as oil prices surged and AI safety concerns weighed on sentiment
- UK payrolled employment dropped 26,000 in August, following a revised 19,000 fall in July
- Unemployment held at 4.9% for a fourth straight month, below the 5% forecast
- Brent crude rose to $107.42 a barrel after a Saudi pipeline outage disrupted supply
- The Bank of England is expected to hold interest rates at 3.75% following the weak jobs data
British stocks fell on Tuesday as rising oil prices and a debate over AI development added pressure to already fragile market sentiment.
The FTSE 100 dropped 0.60%, while Germany’s DAX fell 0.36% and France’s CAC 40 was down 0.64%. Sterling slipped 0.21% to $1.3472 against the dollar.
The market weakness came as Brent crude climbed 1.67% to $107.42 a barrel. The jump was driven by a Saudi East-West pipeline outage that analysts at ING said could keep prices “well supported” for several weeks.
WTI crude also rose 1.7% to $103.09. Vessel transits through the Strait of Hormuz fell to just four on Monday from ten, according to data from Kpler cited by Reuters.
UK Jobs Market Continues to Soften
On the jobs front, UK payrolled employment fell 26,000 in August. That followed a revised drop of 19,000 in July, leaving PAYE employment 0.5% lower than a year earlier.
Capital Economics had forecast a rise of 5,000, making the actual result a clear miss.
Private sector payrolls took the biggest hit, falling 34,000 in August and down 0.8% year-on-year. Retail and hospitality saw annualised declines of more than 3%.
Job vacancies continued to slip, falling to 702,000 in the three months to August, down from 706,000 the month before. That is the lowest level outside the pandemic in over a decade.
Annual wage growth including bonuses eased to 3.9% in July from 4.2% in June. Regular pay held at 3.5%, in line with forecasts.
Capital Economics said the weaker labour data supports the view that inflation pressures from higher energy costs will remain limited. The firm said there is a reasonable chance the Bank of England will not raise rates from 3.75% this week or at all.
ING expects the Bank’s Monetary Policy Committee to vote 6-3 to hold rates.
AI Safety Debate Adds to Uncertainty
Away from the economic data, a public rift over AI development added to market unease.
Anthropic CEO Dario Amodei called for stronger safeguards on advanced AI models, including independent third-party assessments. He warned the technology could escape human control and cause catastrophic harm.
OpenAI CEO Sam Altman and Elon Musk backed a cautious approach. US President Donald Trump opposed slowing development, saying it could hurt competition with Chinese AI companies.
On the corporate side, Trustpilot reported first-half revenue up 23% to $151.4 million. Kier Group posted full-year revenue of £4.39 billion, up 7.5%, with a record order book of £11.9 billion heading into 2027.
Gold futures fell 0.52% to $4,328.87, with ING warning bullion is “vulnerable” ahead of Wednesday’s Fed decision.
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