FTSE 100 Live: Stocks jitter as bond market ‘nervous’ ahead of Labour civil war

Welcome back to the City AM liveblog.

The past few days of political drama is set to come to a head today and UK assets are bracing for a showdown.

Gilt yields see-sawed yesterday as Sir Keir Starmer rallied his troops to defend his premiership. But some doubt was cast as reports emerged health secretary Wes Streeting is gearing up for a challenge.

Fresh growth data has thrown a spanner in the works, however, with Chancellor Rachel Reeves using the 0.3 per cent growth in March to tout that her economic plan is working and any disruption would be harmful for the economy.

Also this morning, Angela Rayner has also confirmed she has settled her tax affairs with the HMRC with allies of the former Deputy Prime Minister briefing that she is ready to run to stop Streeting.

Neil Wilson, UK investor strategist at Saxo Market said: “Can we avoid the Thucydides Trap? No, not the inevitable clash of China and the US, but the rising power of Angela Rayner coming up against the established power of Keir Starmer…? Guess we find out later. Bond markets are nervous.”

We’re expecting to hear from Streeting today, where he is reported to be confirming his resignation and bid to overthrow Starmer. This is also expected to lead to the entry of other candidates into the fight for Downing Street with Manchester Mayor Andy Burnham also tipped to have found a seat to make a run for Parliament.

Elsewhere, pressures on markets continue to be driven by the prolonged conflict in the Middle East.

Donald Trump is in China this week for key talks with Beijing over ways to get the oil supply flowing again as the closure of the Strait of Hormuz continues to clog up global output.

In the opening remarks of their meeting, China’s President Xi Jinping said China and the US “both stand to gain from cooperation and lose from confrontation”.

We’ll be bringing you the latest on this and more.