UK equities continue their upward trajectory as oil prices decline. UK shares experienced a modest increase on Wednesday, buoyed by optimism surrounding a potential resolution to the Iran conflict, which contributed to a decline in crude prices and enhanced risk appetite. Positive updates from Pets at Home and Hollywood Bowl further propelled gains within the midcap index.

The blue-chip FTSE 100 index rose 0.2% to 10,509.08 points in the mid-session trading, advancing for the eighth straight session. The midcap FTSE 250 added 0.8%, inching towards a three-month high.

• UK defence stocks experienced an uptick in anticipation of the signing of a new defence and security treaty with Poland on Wednesday. This move is part of Prime Minister Keir Starmer’s broader strategy to strengthen relationships with European nations.
• Rolls-Royce gained 2% and Chemring advanced 2.7%, while the defence sub-Index added 1.3%.
• Easing bets of rate hikes in the UK have supported the domestic share rally, with the FTSE 100 now within 4% of its late-February record high.
• Market participants have factored in a single quarter-point increase in interest rates by the Bank of England before the year’s conclusion, assigning a 50% probability to the likelihood of an additional move of the same magnitude.
• The latest data on UK consumer behaviour indicates that British grocery inflation has moderated to 3.1% in the four weeks leading up to May 17, marking its slowest rate of increase since December 2024. Notably, the complete effects of the Iran conflict have yet to be reflected in supermarket pricing.
• Shell dropped about 2%, and BP also fell by approximately 2%, reflecting a decline in oil prices as traders evaluated the developments in US-Iran negotiations.
• Hollywood Bowl jumped nearly 15% to the top of the FTSE 250 index after the leisure bowling operator reported higher spend per game in both the UK and Canada and announced a new £5 million share buyback.
• Pets at Home opened new tab rose 6.2% after reporting its retail sales returned to growth in the fourth quarter and have accelerated since.
• Amazon announced an investment exceeding £15 billion in Britain in 2025, positioning itself to meet its £40 billion target by 2027. This investment supports the expansion of sites, studios, and drone delivery trials in its third-largest market worldwide.