FTSE 100 on the back foot in early trades as crude prices ramp higher.

Mining stocks lose ground as China data disappoints while energy giants rise as crude shoots higher again.

The UK's leadership crisis continues, with gilt investors the canaries in Labour's coalmine.

Both 10-year and 30-year gilts rise to fresh multi-decade highs.

Anglo American shape shifts again, offloading its Australian steelmaking coal business.

Susannah Streeter, chief investment strategist, Wealth Club

"There's a downbeat mood at the start of the week as worries about a global energy crunch collide with fresh instability on the UK political scene. The FTSE 100 has opened on the back foot and has struggled to gain ground, with little sign of optimism to provide any lift from its recent doldrums. Sentiment is also being dragged lower by signs of weakness in China as retail sales slowed sharply in April and industrial production also decelerated. This snapshot of slower demand in the world's second-largest economy is weighing down mining stocks.

Brent crude, the benchmark, has raced above $111 a barrel, as fears of a fresh escalation in the Iran conflict take hold. Hopes of any kind of fast resolution have faded as Tehran and Washington appear poles apart in their demands. There had been some expectation that talks in China between Trump and Xi Jinping might help prompt a breakthrough, but that has not materialised.

In the meantime, an attack on a nuclear power plant in the UAE has caused a fresh wave of worry. The ceasefire is falling apart at the seams, and nerves are frayed. A US waiver, which had enabled the temporary purchase of stranded Russian seaborne crude oil, has also expired, which further limits global supplies of oil. Rising crude prices, though, are a boon for listed energy giants, with BP and Shell gaining from fears of ongoing geopolitical fracture.

Amid these heightened global tensions, the Downing Street drama is adding to the unpredictability. At a time when the UK needs stability and a doubling down on efforts to attract investment, it's having the opposite effect. Fears that the energy crunch would set off an inflation surge had already rattled bond markets.

At a time when the UK needs stability and a doubling down on efforts to attract investment, it's having the opposite effect. Gilt investors are the canaries in Labour's coalmine, demonstrating the increased wariness with which the UK is being viewed. The recent sell-off in UK government debt has spiked yields, which is set to increase the amount the government has to pay in interest and will therefore act as a fresh squeeze on government spending. The yield on 10-year gilts remains highly elevated, edging towards 5.2% - highs not seen for 18 years, while longer-dated debt has also sold off heavily, with 30-year gilt yields at 5.86%, levels last reached in January 1998.

So, just at a time when Starmer's challengers are calling for higher spending, and companies are crying out for tax relief, the political debacle is making both increasingly impossible. Labour's leadership league is now dominating the airwaves, filling the gap left by Eurovision. The suited and booted contenders are chasing the Downing Street glitterball, but risk trampling chances of growth in their pursuit.

Anglo American is shape-shifting again, shedding its steelmaking coal business in Australia. This is part of its transformation from a sprawling diversified resources group into a far more focused copper and iron ore producer. Its sale to privately held UK company Dhilmar involves an upfront payment of US$2.3 billion on completion and a price-linked earnout worth up to US$1.575 billion over five years. This not only strengthens the balance sheet, ahead of its planned merger with Canada's Teck Resources, but also keeps it exposed to future strength in coal prices. So while it's exiting what's viewed as a non-core business, it's still set to capture returns from a volatile but important market for global steel production. Anglo is spinning plates here but at different speeds. It's still rapidly pursuing copper and iron ore, which are seen as long-term structural growth drivers, but this deal will give it extra flexibility and ongoing revenues from coal, at a time when Anglo is facing highly capital-intensive projects expanding copper production."

Ends

For further information contact:

Jo Thorne: jo.thorne@wealthclub.co.uk

Wealth Club

Wealth Club was founded by former Hargreaves Lansdown director Alex Davies in 2016. At Hargreaves Lansdown Alex and his team were responsible for launching its SIPP business and growing it to be the UK's largest SIPP provider. Alex was a director of and shareholder in Hargreaves Lansdown which floated on the stock exchange in 2007. This meant that age 38 he was in the fortunate position to be able to retire. With time and a big tax bill on his hands Alex began investing in start-ups using the EIS and VCT schemes. Whilst there were some great opportunities out there, there was very little good quality information to help people decide where to invest and it was difficult to know whom to trust in a very "word of mouth" type of industry. In most cases it was also very difficult to apply for and monitor these investments online.

With this in mind Alex set up Wealth Club. Today Wealth Club is the largest non-advisory investment service exclusively for high net worth and sophisticated investors. It is the biggest broker of Venture Capital Trusts and EIS funds as well as recently launching a discretionary management service and opening up Private Markets funds to individual investors.

Today Wealth Club has 70,000 members who receive regular information on investments from them. Of those 14,000 have become clients and invested more than £1.8 billion through the platform. Its clients typically have £1 to £5 million of wealth, although 22% have more than £5 million and 6% more than £10 million. The business is completely online, although clients can speak to an expert on the phone who will answer their call within a few rings.

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