August closed out with UK indexes roughly where they started at the beginning of the month. But there was plenty of market movement within the month. Soaring bond yields across the developed world dented UK stocks in the middle of the month, but the latest earnings from Nvidia NVDA gave equity markets a new lease of life going into September. In the bond markets, 10-year gilt yields remain above 5% coming into a time when the UK government’s financial plans are about to come under scrutiny again.
This week’s Markets Brief starts with a look at share buybacks, with some new research suggesting that the UK is now a world leader in companies repurchasing their own shares. And with the return of UK parliament for September, the new government’s first budget is just weeks away. Will it be a tax-raising event after all? New housing market data from one of the UK’s largest mortgage lenders is also due, and it’s likely to provide an insight into sentiment over the summer.
Buyback Britain?
Amid a boom in overseas bids for London-listed stocks, another significant buyer of UK stocks has emerged: UK companies themselves.
FTSE 100 companies declared buybacks worth £36 billion in the first half of 2026. This accounted for 60% of 2025’s full year total, which was in itself a record year for repurchases, according to AJ Bell. The trend continued during the recent summer earnings season. Shell SHEL announced a further USD 3 billion buyback, marking its 19th consecutive quarter of at least USD 3 billion in repurchases, while UK banks Barclays BARC and Lloyds Banking Group LLOY unveiled their own £1 billion programs.
Why do companies buy their own shares? When a company has excess cash that it doesn’t need to reinvest or use for acquisitions, it can choose to reward shareholders through dividends or share buybacks. By reducing the number of shares outstanding, buybacks can improve a company’s earnings per share, as profits are divided by fewer shares. Buybacks can also signal confidence from management that the stock is undervalued.
“Buybacks are a “significant support” for the UK market, writes Columbia Threadneedle Investments’ head of UK equities Jeremy Smith in a note.
Indeed, energy and bank stocks have driven the pace of buybacks in recent years, as higher interest rates and energy prices have led to excess profits for these sectors.
However, the story goes beyond these two sectors. Columbia Threadneedle’s Smith notes some 55% of large UK-listed companies have repurchased at least 1% of their shares over the last year, the highest proportion of any market globally.
“This enhances earnings per share growth and highlights the attractive valuations and cash-generative nature of many UK companies,” says Smith.
While investors continue to pull capital out of the UK—a net £3.1 billion has exited the UK Flex-Cap Equity sector so far this year, according to Morningstar data—companies appear to be generating demand for their own shares.
“The pace of buybacks and M&A activity suggests companies and acquirers can see value that fund flows still cannot,” says Henry Ince, analyst, equity strategies at Morningstar.
Autumn Budget Draws Near: Will Taxes Rise?
The UK government is back at work this week as parliament returns from summer recess. Tax is once again back in the limelight. A few days ago, prime minister Andy Burnham declined to rule out more tax rises at the Autumn Budget.
Back in 2024, then chancellor Rachel Reeves, opted to stick to Labour’s manifesto commitment of not raising the headline rates of income tax, VAT, or National Insurance. It’s telling that one UK financial advisor we spoke to this week thinks she should have just bitten the bullet and broken that pledge.
As lobbying ramps up ahead of the Oct. 28 speech, other bold ideas are coming out the woodwork. One proposal will potentially unsettle those in retirement. That’s a recommendation to extend National Insurance surcharge, which is currently only paid by working age people, to pensioners.
Contained in a research paper from the think tank IPPR, this plan is supported by the idea that “because NI is well understood and popular, [this] may even retain some popularity with the public.” Will it be popular with UK bond markets, where long-term yields are hovering near multi-decade highs?
Some experts support the idea of a tax-raising budget, rather than one that increases borrowing, as a way of getting “bond vigilantes” onside. Economists at investment bank ING, for example, say that tax increases have credibility with markets because they are harder to reverse.
“Tax increases wouldn’t necessarily need to be dramatic, either,” writes ING’s developed markets economist, James Smith.
Housing and Mortgage Data Due
In a big week for housing data releases, Nationwide will publish its August House Price Index on Tuesday Sep 1. July’s data showed UK annual house price growth slowed to 1.8%, down from 2.2% in June, so a continuation of this trend is possible, experts say.
The housing market has remained weak in recent months, reflecting uncertainty around the UK’s economic backdrop and the likely path of interest rates. The inflationary impact of the Iran war has caused expectations of interest rates to rise, which has pushed up the price of mortgage repayments.
Also on Sep. 1, the Bank of England will publish data for mortgage approvals and consumer credit.
In terms of corporate news, global distributor Bunzl BNZL will release its half-year results on Sep 1, while asset manager M&G MNG will report on Thursday Sep. 3.
