Weekly Market Update: 2nd Oct
02/10/2026
Lucy Smith discusses the continued sell-off in global bond markets, Accenture's rally following their latest earnings report, and the impact of the new Your First Home scheme on UK homebuilders.
Transcript
Good morning and welcome to the Killik & Co market update.
This week the global bond sell-off continued, with government bond prices falling and yields moving higher across most major markets. The move reflects a combination of factors that have been building for some time, including renewed geopolitical tensions in the Middle East, concerns over rising government debt levels and persistently elevated energy prices.
This chart shows the US 10-year Treasury yield in dark blue and the 30-year yield in light blue. Longer-dated bonds typically offer higher yields to compensate investors for taking on additional time and inflation risk. As you can see, yields have continued to rise sharply over the past few months as the pressures have intensified. The US 10 year yield this week reached almost 5.3%, a 55bps rise since the start of September, and a level we haven’t seen since the early 2000s.
US inflation data released this week came in slightly below expectations, leading investors to scale back expectations of an October Fed rate hike, with the implied probability falling from nearly 70% last week to around 30%. While that is generally supportive for both equities and bonds, inflation remains above target and bond yields are likely to stay elevated until there is clearer evidence that price pressures are easing sustainably.
Inflation readings across several European economies, including France, Germany and Italy, also pointed to ongoing price pressures, reinforcing concerns that higher energy costs are continuing to feed through into the broader economy.
In the UK, gilt yields have followed a similar path higher. This chart shows the UK 10-year gilt yield in dark blue and the 30-year yield in light blue. The 30 year yield rose above 6% this week, a level not seen this since 1998. Higher borrowing costs increase pressure on government finances and reduce fiscal flexibility ahead of this month's Budget. Despite this, bond markets reacted relatively calmly to the Prime Minister's keynote speech at the Labour party conference, which suggests investors were not materially concerned by the measures outlined.
Turning to equities, this chart shows the year-to-date performance of the FTSE 100 in light blue, the S&P 500 in pink and the MSCI World Index in dark blue.
Equity markets have remained weaker, and have been broadly flat since we started to see the pick up in yields since July. All indices have experienced a sell off more recently, with performance coming under additional pressure over possible fallout from the surging yields and brent crude remaining above $100 per barrel.
One of the standout corporate stories this week came from Accenture, which delivered a stronger-than-expected set of quarterly results, with the shares being up 17% pre market. Accenture is one of the world’s leading professional services companies, providing management consulting, technology and outsourcing services to clients across a range of industries to help its clients run their businesses better.
This chart shows the company's performance over the last ten years. The shares had come under significant pressure amid concerns that advances in AI could reduce demand for traditional consulting and outsourcing services. The shares fell to a 9 year low in June after they lowered their revenue forecasts in the last quarterly update, citing the Iran war for holding up two large contracts. However, the latest results suggest the opposite may be true. Management have also highlighted growing demand for AI-related projects and indicated that revenue growth could accelerate over the coming year.
This chart shows Accenture's revenue breakdown by industry. The company's largest segment is Products, which includes consumer goods, retail, travel services, industrials and life sciences. Importantly, revenue is well diversified across its five operating groups, reducing dependence on any single industry and helping improve the resilience of earnings throughout the economic cycle.
A particularly encouraging metric from the results was new bookings, highlighted in pink on this chart. New bookings provide an indication of future revenue demand because they capture the value of work that clients have already committed to. While bookings have fluctuated over recent quarters, the latest figure was particularly strong and helped push full-year bookings to a record level of $84.5 billion, helping to dispel market anxieties that enterprise generative AI adoption would destroy or delay demand for traditional IT consulting and services.
Last weekend the government announced plans for a new scheme aimed at supporting first-time buyers. Under the proposals, buyers would be able to purchase a new-build home with a deposit of just 2.5%, supported by a government-backed equity loan. Further details are expected in the Budget later this month.
This chart shows the performance of four major UK housebuilders over the past year: Taylor Wimpey in light blue, Persimmon in black, Vistry in teal and Barratt Redrow in pink. All four companies have struggled this year amid concerns over higher interest rates and weaker housing demand. However, the announcement of the proposed Your First Home scheme prompted a sharp rebound, with many names within the sector delivering double-digit gains at the start of the week.
Data released by Nationwide this week showed that UK house prices fell by 0.2% in September. As this chart illustrates, house prices surged during 2020 to 2022, supported by low interest rates and temporary stamp duty incentives, but have been under pressure more recently, partly due to the increase in borrowing costs.
The Bank of England also reported a decline in mortgage approvals during August, highlighting the challenges facing the housing market. As a result, the government will be hoping that measures aimed at supporting first-time buyers can provide some encouragement for both consumers and the wider housing sector.
Looking forward to the week ahead we have results from Shell on Wednesday, and Tesco and Fast Retailing on Thursday.
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