UK stocks near three-week lows on Middle East tensions
UK markets held near three-week lows as US-Iran tensions and a US inflation report kept investors cautious; WH Smith plunged 16.4% after another profit downgrade.
London — UK equity markets hovered close to three-week lows on Wednesday as renewed tensions between the United States and Iran and an upcoming US Consumer Price Index report restrained trading. By 0752 GMT the FTSE 100 and FTSE 250 had each risen about 0.2% from earlier weakness but remained near the recent trough.
Trading volumes were muted as investors awaited the US inflation print for May and a Bank of Canada policy decision later in the day.
WH Smith led losses on the FTSE 250, plunging 16.4% after cutting its annual profit forecast for the second time in two months and announcing an equity fundraising to strengthen its balance sheet. The retailer cited travel disruptions linked to the Iran conflict and lower passenger spending, pushing the stock to its lowest level since late 2010.
Banking stocks weighed on the market, with the sector down around 1%. HSBC fell 1.9% and Standard Chartered lost 0.8%. JP Morgan analysts warned that Beijing’s tighter capital controls on cross-border investment flows could have a larger impact than previously estimated, increasing pressure on lenders with exposure to Hong Kong and China.
Geopolitical developments kept oil and shipping risks under watch, though crude prices were relatively steady and did not point to an immediate supply disruption. US officials have discussed a possible agreement related to the Strait of Hormuz.
Inflation expectations shaped market positioning ahead of the US CPI release. LSEG data showed investors priced in about a 25 basis point chance of a Bank of England rate increase by September.
Other notable moves included Pennon, down 1.3% after its newly appointed chief executive flagged the need to improve operational discipline despite a return to annual profitability. EnQuest rose about 18% after agreeing to buy interests in four offshore contracts in Malaysia from state-run Petronas in a deal valued at up to $833 million.
In currency markets the pound strengthened to around $1.3390 as markets positioned for the US inflation read. Overall activity in UK equity markets remained subdued as participants awaited data and policy signals.
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