UK stocks decline amid Middle East war and earnings updates
UK indexes fell as Middle East tensions pushed oil above $90. While energy stocks rose, weak earnings from Legal & General weighed on the broader market.
Equity markets in the United Kingdom experienced a downturn on Wednesday as geopolitical tensions in the Middle East weighed heavily on investor sentiment. The blue-chip FTSE 100 index declined by 0.5%, while the mid-cap FTSE 250 fell by 0.4%. This broad sell-off follows escalating conflict involving the United States, Israel, and Iran, which has notably disrupted critical shipping routes through the Strait of Hormuz, raising the immediate risk of an inflation shock.
The disruption has propelled energy prices upward, with Brent Crude Oil rising above $90 per barrel. Despite a proposal from the International Energy Agency for a record release of oil reserves, market analysts remain concerned that such measures will be inadequate to ease supply fears. Amidst these rising costs, British Finance Minister Rachel Reeves indicated that the government is evaluating options to protect households.
I would consider action to shield households from surging energy costs, but it is premature to cap tariffs or freeze fuel duty now.
The energy sector provided a rare bright spot for the market, gaining 2.1% as oil majors Shell plc and BP p.l.c. saw their shares climb by 1.9% and 2.8%, respectively. However, most other FTSE 350 sub-sectors remained in negative territory as investors processed a series of mixed corporate updates.
In the financial sector, Legal & General Group Plc saw its shares tumble by 6.7% after the insurer failed to meet full-year profit expectations and reported a decline in its solvency ratio. The company is currently undergoing a strategic overhaul under CEO Antonio Simoes. Similarly, the recruitment firm Robert Walters plc experienced a 7.9% drop in its share price. The company announced it would scrap its final dividend for 2025 following an annual pretax loss attributed to a stagnant global job market.
Conversely, Balfour Beatty plc emerged as a top performer, with its stock surging 8.9%. The construction group issued a positive outlook, forecasting a high-single-digit percentage increase in its 2026 operating profit. The company highlighted a record order book, which includes significant nuclear and power projects within the domestic market.
