London equities opened with little direction as investors weighed renewed friction in the Middle East against a steady flow of corporate earnings updates, with sentiment held back by concerns that higher energy costs could filter through to households and dampen discretionary spending in the months ahead.
The FTSE 100 moved unevenly in early trade as Iran accused the United States of breaching a ceasefire arrangement and warned of retaliation, while reports emerged of activity around the port city of Bandar and the downing of a US drone.
Despite these developments, expectations of further diplomatic engagement have not fully faded, with oil prices continuing to oscillate below the $100 mark and Brent crude holding just above $97, suggesting traders are still pricing in the possibility of a negotiated outcome rather than prolonged escalation.
Pressure from Gulf states for de-escalation, combined with political considerations linked to upcoming US electoral cycles, has contributed to a view that a settlement remains achievable, although the path towards it is proving uneven and increasingly sensitive to short-term incidents. That uncertainty is feeding directly into energy markets, where volatility in crude is acting as a barometer for wider risk appetite.
BP remained under strain as shares extended their recent decline, with lower oil prices compounding investor unease following the abrupt removal of chair Albert Manifold over conduct issues. The stock fell a further 5% in the previous session and stayed under pressure, as leadership changes once again reshaped the governance structure at the group.
Interim chair Ian Tyler has stepped in, but concerns have emerged over whether the strategic focus on oil and gas, previously associated with Manifold’s appointment, could lose momentum during this transition period.
In contrast, the leisure sector delivered a more upbeat tone as Hollywood Bowl Group posted strong gains after announcing a £5 million share buyback alongside an increased dividend, supported by rising sales as consumers continued to prioritise lower-cost social activities.
The FTSE 250 operator saw revenue climb to £141.5 million, with profit growth and higher customer spend helping to offset cost pressures linked to expansion, while shares surged more than 12% as investors responded to both operational progress and a clearer growth trajectory in the UK and Canada.
Pets At Home presented a more mixed picture, with annual profits falling sharply following sustained pressure in its retail division, even as its veterinary arm continued to deliver growth.
The group reported a 28.3% drop in pre-tax profit to £86.5 million and a marginal decline in revenue, reflecting weaker retail demand and pricing adjustments aimed at stabilising volumes. However, signs of improvement began to emerge towards the end of the year as food volumes recovered, suggesting early traction from its pricing strategy.
Despite weaker earnings, the shares rose as investors focused on turnaround progress under new chief executive James Bailey, who has begun reshaping the business following a challenging period marked by profit warnings.
The company also reduced its dividend and outlined further buyback plans, while maintaining guidance for modest profit growth in the current year, indicating a cautious but stabilising outlook as it attempts to rebuild momentum across its core operations.