London open: Stocks dip as investors assess US Treasury buyback
By Michele Maatouk
Date: Thursday 20 Aug 2026
(Sharecast News) - London stocks dipped in early trade on Thursday as market participants continued to mull the US Treasury's buyback plan.
At 0835 BST, the FTSE 100 was down 0.3% at 10,716.68.
The Treasury said in a statement on Wednesday that it was increasing "by at least double" the size of liquidity support buyback operations for bonds maturing in the 10- to 20-year and the 20- to 30-year ranges. The current maximum size of $2bn per operation will be at least $4bn per operation.
Susannah Streeter, chief investment strategist at Wealth Club, said investors were adopting a wait-and-see approach as they assess how successfully this will calm nerves. She said it "could prove to be a sticking plaster which could be rapidly ripped off, given that bond vigilantes are on such high alert".
"The Treasury says the move is designed to provide greater liquidity support to the longer end of the market, and that can help dampen volatility and bring borrowing costs down in the short term. But it does not change the fundamental picture of rising government debt, persistent deficits and inflationary pressures," Streeter said.
"And the latest minutes from the Fed show increasing wariness about those inflation risks. Several policymakers indicated they were prepared to raise rates if inflation fails to move down towards the 2% target, with many saying higher borrowing costs could ultimately be needed to prevent price pressures becoming entrenched. They are particularly concerned about energy prices and developments in the Middle East, while there are also worries that the huge investment boom in AI could keep inflation elevated through higher demand for chips, electricity and other infrastructure."
On home shores, the latest Consumer Sentiment Monitor from the British Retail Consortium showed that consumer confidence improved in August, with expectations for the economy, personal finances and retail spending all strengthening over the month.
The BRC-Opinium survey showed expectations for the state of the economy over the next three months rising to a net balance of -28 from -36 in July, while expectations for personal finances improved to -9 from -12.
Retail spending expectations climbed more sharply, with the net balance rising to +8 from +1, while overall spending expectations edged up to +15 from +13. Expectations for saving slipped to -5 from -4.
"Consumer sentiment continued to rise with confidence in the economy hitting its highest level since the historical lows reached at the start of the Iran conflict. Expectations for personal finances saw a small improvement, driven by an optimistic Gen Z," said Helen Dickinson, the BRC's chief executive.
"The Burnham administration is enjoying a honeymoon boost driven by less pessimism about the outlook, but maintaining that momentum will depend on whether the Government can ease the pressure on household budgets."
Dickinson said that the upcoming Autumn Budget in late-October will be the "acid test of this government's real commitment to growth", calling on the government to reduce retail business costs, from energy bills to business rates.
"A Budget that backs retail and reduces costs is a pro-consumer Budget," she said.
In equity markets, JD Sports Fashion tumbled as it cut its FY27 profit guidance following weaker trading in the second quarter.
Recruiter Hays lost ground after saying it swung to a pre-tax loss in the year to the end of June due to restructuring charges.
Streeter said: "The headline statutory loss of £54.5 million looks ugly, but it masks an underlying improvement in the business. Strip out exceptional charges, and operating profit rose 3% like-for-like to £48.6 million, slightly ahead of expectations, despite an 8% fall in net fees."
Standard Life edged lower as it announced the launch of a UK pension risk transfer partnership with a consortium of firms, including Goldman Sachs, with a combined initial capital commitment of up to £2bn.
Legal & General, Imperial Brands, Centrica and Anglo American all fell as they traded without entitlement to the dividend.
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