FTSE 100 rises on energy and bank gains before BoE vote

The United Kingdom's blue-chip FTSE 100 index climbed 0.6% on Tuesday, supported by gains in the energy and banking sectors as investors awaited a key interest rate decision from the Bank of England. The mid-cap FTSE 250 also saw a slight increase of 0.1% despite persistent geopolitical volatility in the Middle East. Tensions in the region intensified as Iran expanded its military strikes into the United Arab Emirates, marking the third week of a conflict involving the United States and Israel. This escalation has significantly impacted global energy markets, with oil prices rising 4% as disruptions continued in the Strait of Hormuz. The energy sector reached a record high, advancing 1.1%, with industry leaders BP p.l.c. and Shell plc both gaining more than 1%. Financial stocks rose by 0.6%, while the utility sector outperformed with a 1.4% increase. In the fixed-income market, British borrowing costs saw a slight decline for the second day but remained elevated due to ongoing regional instability. Markets are currently pricing in a 50% probability of a rate hike in November. While most economists have shifted their expectations for a rate cut to the second quarter of 2026, analysts at J.P. Morgan suggested that the central bank could maintain current rates until early 2027. Among individual corporate performers, Close Brothers Group plc saw its shares drop 10.4% after the lender announced plans to reduce its workforce by 600 roles by 2027. In contrast, Trustpilot Group plc shares surged 23% following a report that its annual profit had quadrupled.