Thursday 03 September 2026 6:27 am | Updated: Thursday 03 September 2026 3:53 pm

As it happened: Vodafone leads FTSE 100 rally after TV launch; oil jumps again

Vodafone and Three company logos on a red and white sign outside a modern glass building — Welcome to City AM's FTSE 100 live blog (VodafoneThree/PA Wire)

Welcome back to the City AM liveblog.

Telecoms giants Vodafone and Airtel Africa led a FTSE 100 rally on Thursday afternoon. Investors brushed off early losses caused by the steep sell-off in the the bond market.

Two-year gilt yields, which gauges short term interest rate expectations, have jumped over 4.5 per cent, pushing up borrowing costs and putting the UK’s economic stability under threat.

The Bank of England has set interest rates at 3.75 per cent yet a cautious tone in previous Monetary Policy Committee meetings has led analysts to believe it could raise borrowing costs as a result of a prolonged Iran war.

City analysts have said that the UK is suffering from higher gilt yields due to the country’s vulnerability to inflation shocks.

Brent crude held firm around $95 per barrel on Thursday after rising for three consecutive sessions, as investors continued to be spooked by the renewal of hostilities in the Middle East alongside weak efforts to reopen the Strait of Hormuz.

RBC Capital Markets analysts said they struggled to see current interest rate pricing “getting realised” though there were risks for “further weakness”.

Forecasts were heavily reliant on hostilities in the Middle East simmering out. A signal by the US Federal Reserve chair Kevin Warsh that interest rate hikes could be on the horizon have also led to US Treasuries being sold off at a rapid pace, pulling global yields up.

Economists broadly predict inflation in the UK to creep over three per cent in the coming months before dropping back to two per cent.

However, the Bank’s MPC warned in August it would likely raise interest rates in the event a conflict re-emerges between Iran and the US. In its worst case scenario, inflation could top four per cent, which would be double its target two per cent inflation rate.

We’ll be bringing you the latest market updates and analysis.