FTSE 100 opens greater and borrowing prices rise forward of Starmer’s ‘reset’ speech – MARKETS LIVE

On May 11, 2026

All eyes are on the bond market today as the fallout from the local elections over the weekend increases the likelihood of a Labour leadership challenge.

Investors are worried that a Left-wing leader such as Angela Rayner would mean higher spending funded by tax hikes and borrowing, which would trigger the ‘bond vigilantes’.

The Prime Minister will set out another ‘reset’ speech later this morning.

If underwhelming, it could be the final straw to push his rivals to break cover and call for his resignation. He is already facing an immediate leadership challenge if the ‘stalking horse’ candidate Catherine West gets the required 81 backers.

The FTSE 100 opened 22 points higher, or 0.22 per cent, to 10,256, while gilt yields also jumped at the opening bell.

The 10-year gilt yield rose by more than 5 basis points in early trade to 4.968 per cent, while the 30-year jumped to 5.64 per cent.

It came as the price of Brent crude rose to around $105 after Donald Trump dismissed Iran’s response to his latest attempt to de-escalate the conflict.

In a post on Truth Social, the President said: ‘I have just read the response from Iran’s so-called ‘Representatives.’ I don’t like it – TOTALLY UNACCEPTABLE.’

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Compass ups profit guidance

Away from the political drama of the day, Compass Group provided some welcome respite from the doom and gloom.

The catering group struck an upbeat tone as it raised its annual profit outlook. In an update to investors, Compass said it expects full-year underlying operating profit growth above 11 per cent, up from 10 per cent.

Shares rose more than 4 per cent at the open, putting it among the FTSE 100’s top gainers.

Chris Beauchamp, chief market analyst at IG said: ‘It is quite refreshing to see an update where the current geopolitical situation doesn’t really feature.

‘Compass did nod towards the potential for more disruption, but the main focus was on a slight upgrade to guidance. Given the general tone of RNSs these days, this provides a welcome change and should put some more strength into the shares after a miserable 2025.’

Compass said new contract wins were up 14 per cent to $4.1billion, with around half coming from organisations outsourcing food services for the first time.

‘That points to a structural shift rather than a short-term boost,’ says Mark Crouch, market analyst at eToro. ‘Particularly as businesses continue looking for ways to cut costs and improve efficiency.’

Underlying operating profit for the six months to the end of March jumped 12 per cent to $1.84billion, while organic revenue grew 7.2 per cent.

Bond markets jittery

The political backdrop of a potential leadership challenge is sending jitters through markets and Starmer’s speech later this morning is unlikely to calm those nerves.

Investors’ main concern is that Labour will lurch further to the Left to appease the membership and stem their losses to the Green Party. Angela Rayner’s intervention on Sunday – to bring back Andy Burnham or else – has added fuel to that fire.

The 10-year gilt yield, which moves inversely to the price, rose by more than 5 basis points in early trade to 4.968 per cent, while the 30-year jumped to 5.64 per cent. The equivalent German, French and US bond yields were up between 1 and 2 basis points.

‘Fiscal loosening is not what the market wants to see at a time of existing pressures on finances, a fragile fiscal position, and higher borrowing costs due to the war,’ says Neil Wilson of Saxo. ‘No fireworks yet but we could see some outsize moves should a leadership contest be triggered. Bond vigilantes are watching, waiting.’

FTSE 100 in the green

The FTSE 100 jumped as much as 0.45 per cent a few minutes after the opening bell, but has since settled up 32 points, or 0.31 per cent, at 10,265.

The index is led by British Airways owner IAG, up 3.79 per cent, and Compass Group, which jumped 3.19 per cent after raising its profit guidance.

BP and Shell were also among the biggest risers as Brent crude climbs to $105 a barrel.

Richard Hunter, head of markets at ii said: ‘The FTSE 100 has been something of a beacon of light throughout the conflict for the most part, underpinned by the stability and defensive qualities of many of its constituents.

‘The latest progress takes the index to a gain of 3.5 per cent in the year so far, with international investors seemingly positioned to turn to the index in more volatile times such as these.’