Ex-dividend shares tame FTSE gains as UK bond yields hit fresh 14-year high

Traders ditching companies that have yet to announce the details of their next shareholder giveaway tamed London markets’ gains today.

The capital’s premier FTSE 100 index jumped 0.35 per cent to 7,541.85 points, while the domestically-focused mid-cap FTSE 250, which is more aligned with the health of the UK economy, climbed 0.55 per cent higher to 20,136.65 points.

Several big names were trading without the rights to their next dividend, including large finance firms. 

A lack of entitlement to current dividends prompted investors to ditch Britain’s biggest bank HSBC, down 0.81 per cent, fund manager Legal and General, down 4.14 per cent and insurer Aviva, down 4.23 per cent.

These companies are in “ex-dividend,” a situation in which traders who buy their stocks now will not receive payments from their existing dividend programme.

“The FTSE 100 was dragged down by some big names trading without the rights to their next dividend,” Danni Hewson, financial analyst at FTSE 250-listed AJ Bell, said.

The UK bond market sell off triggered by a hotter than expected July inflation figure extended into today.

Yields on 2-year UK government debt climbed to a new 14-year high of 2.464 per cent. Yields and prices move inversely.

The rise has been driven by investors pricing in more rate rises from the Bank of England to tame the biggest inflation surge in four decades. Money markets think rates will hit 3.75 per cent next May.

The pound plunged against the dollar, weakening nearly one per cent.