The FTSE 100 dropped sharply on Friday as concerns about rising inflation and higher interest rates weighed on investor sentiment. The index closed at 10,659.13, down 157.01 points, or 1.5%. The FTSE 250 also declined, falling 146.72 points, or 0.6%, to 24,205.42. However, the AIM all-share index, which tracks smaller companies, rose slightly, gaining 0.4% to 796.09. For the week, the FTSE 100 was up 0.1%, the FTSE 250 gained 1.0%, and the AIM all-share climbed 0.8%. Bond yields increased as investors reacted to central bank decisions and ongoing concerns about inflation. The U.S. Federal Reserve had raised rates earlier in the week, and the Bank of Japan followed suit on Friday. However, the Bank of England held its interest rates steady on Thursday, offering some temporary relief. U.S. 10-year Treasury yields climbed to 5.01%, while 30-year yields rose to 5.34%. In the UK, 10-year government bond yields (gilts) increased to 5.31%. Despite the Bank of England’s pause, analysts are increasingly predicting that the central bank will raise rates in the coming months. Investors remain worried that high oil prices could push inflation higher, potentially leading to more rate hikes. Brent crude oil prices rose to $104.37 per barrel on Friday, up slightly from the previous day. In European markets, the Cac 40 in Paris and the Dax 40 in Frankfurt both fell 1.6%. In the U.S., the Dow Jones Industrial Average dropped 0.4%, the S&P 500 edged down 0.1%, and the Nasdaq Composite also declined slightly. Volatility was further amplified by "triple witching," a period when stock options, index options, and futures contracts expire, often leading to increased trading activity and short-term fluctuations. In the UK, retail sales data showed a rebound in August, with a 0.5% rise in volumes, surpassing market expectations. This followed a decline in July. The British pound strengthened slightly against the U.S. dollar and euro, though the yen weakened despite the Bank of Japan’s rate hike. The central bank raised its policy rate to 1.25%, the highest since 1995, but two of its policymakers opposed the decision, potentially complicating future rate increases. On the FTSE 100, IG Group rose 2.1% after UBS upgraded its rating, but Airtel Africa fell sharply by 11% as it announced a smaller-than-expected fundraising plan for its IPO. Retailer Next and betting firm Entain both declined ahead of results and index changes. Glencore dropped 4.0% after suspending a senior executive amid an ongoing scandal. Gold prices remained largely unchanged at around $4,355 per ounce. The biggest gainers on the FTSE 100 included IG Group and Fresnillo, while the largest fallers were Airtel Africa and Entain. Next week’s corporate results and global economic data, including a central bank rate decision in China, will be closely watched by investors.