London markets rise as crude falls before US inflation data

FTSE Futures Updates

London’s FTSE 100 inched up on Friday, following five consecutive sessions of declines, as oil prices retreated amid reports of a push for a Strait of Hormuz deal. Meanwhile, markets remained poised for the release of crucial U.S. inflation data, scheduled for later in the day.

Despite rising 0.45% to 10,656.78 points by 1006, the blue-chip FTSE 100 index remained on course for its largest weekly loss since early July. The midcap FTSE 250 gained 0.36% and was poised for its sharpest weekly decline in over four months.

  • Oil prices declined by over 2% following a report from the Financial Times indicating that Gulf foreign ministers may convene with their Iranian counterparts to explore temporary shipping arrangements in the Strait of Hormuz.
  • Sectors pressured by rising oil prices experienced a recovery on Friday, while oil majors Shell and BP saw declines of 0.3% and 1%, respectively. However, energy stocks were set to outperform peers for the week.
  • Heavyweight banks rose 1.2%, contributing significantly to the index, with HSBC and Barclays increasing by 1.3% and 1.4%, respectively.
  • Aerospace and defence stocks gained 1.2%.
  • Meanwhile, data indicated that Britain’s economy expanded at the most rapid annual rate in 18 months in July, potentially driven by advancements in AI, thereby enhancing overall sentiment.
  • Investors are closely monitoring U.S. consumer inflation data set to be released later today, following a producer inflation reading on Thursday that exceeded expectations and heightened speculation regarding interest rate increases.
  • Traders are currently assigning a probability of 67.5% to a potential interest rate hike by the U.S. Federal Reserve next week, while they generally anticipate that the Bank of England will maintain its current rates, according to LSEG data.
  • Concerns regarding inflation, coupled with an expanding government budget, have driven bond yields to multi-year highs this week, adversely affecting risk assets.
  • Among other stocks, supplement maker Applied Nutrition dropped 1.1% after executives sold 7 million shares, representing 2.8% of issued capital.
  • Harbour Energy underperformed by 2.9% following a reduction in stake by its top shareholder BASF in the oil and gas producer.