UK stocks dip as stalled US-Iran talks push oil prices higher

Stock Exchange

London shares declined on Thursday as crude oil prices continued their upward trajectory, amidst minimal advancements in the US-Iran negotiations. This situation has intensified inflation worries and contributed to an increase in government bond yields.

The blue-chip FTSE 100 index fell 0.05% to 10,700.05 points by 1007, while the midcap FTSE 250 slipped 0.60%.

  • Oil prices continued to rise following a 4% increase in the prior session, as diplomatic discussions between the US and Iran revealed no tangible advancements. UK’s energy giants rose, with BP gaining 1.9% and Shell adding 1.4%.
  • Industrial stocks were the largest detractors, with Rolls Royce down 2% and BAE Systems down 1.3% respectively.
  • British banks dipped 1%, with heavyweights HSBC and Standard Chartered down over 1% each.
  • Homebuilder Vistry opened a new tab and experienced a decline of 6.3% following its revision of annual profit expectations. The company indicated it would incur a £470 million ($622.51 million) impact due to its strategic overhaul.
  • Raspberry Pi opened a new tab and experienced a 7.7% increase following the announcement of higher first-half revenue and pretax profit by the single-board computing company.
  • Bond markets attracted attention once more as UK gilt yields increased in tandem with global bond yields, with the benchmark 10-year gilt yield reaching a high not seen in over a week at 5.38%.
  • British finance minister John Healey may accept a smaller fiscal buffer to reduce tax rises in next month’s budget as investors signalled the gilt market would not be spooked by a more modest headroom target, the source reported.
  • Bank of England Deputy Governor Clare Lombardelli indicated that interest rates are likely to increase if energy prices remain high, unless there is clear evidence of a weakening economy.
  • Traders are incorporating expectations for at least one 25-basis-point increase by the BoE this year, based on data gathered by LSEG.
  • Investors are also focused on the Trump-Xi summit, perceived as largely symbolic despite attempts to convey stability between both sides amid profound rivalry.
  • Insurer Standard Life and technology services provider Computacenter shed 4.3% and 3% respectively, as their shares traded ex-dividend.