The FTSE 100 fell sharply on Tuesday, closing down 1.4% at 10,227.33, while the FTSE 250 slipped 0.8% to 22,837.96 as weaker oil prices and renewed worries over China’s outbound investment rules weighed on heavyweight stocks.
Oil majors were among the biggest drags after crude prices retreated. Brent crude futures fell to $90.90 a barrel, down from $94.75 at Monday’s London close, after US President Donald Trump said negotiations aimed at ending the Middle East conflict were in their final stages and a deal could emerge within “two or three days”.
The move highlighted how closely energy markets are tracking developments in the region, with oil prices acting as a barometer for expectations of escalation or de-escalation. Shares in BP dropped 3.0% and Shell lost 1.9%.
Financial stocks tied to Asia also came under pressure with Standard Chartered falling 6.3%, HSBC dropping 4.4% and Prudential losing 4.2% after fresh concerns about China’s tighter regulations on outbound direct investment. JPMorgan warned the measures could disrupt existing wealth and personal banking operations.
The weakness in London mirrored a broader risk-off mood on Wall Street, where the Nasdaq Composite was down 1.9%, the S&P 500 fell 1.1% and the Dow Jones Industrial Average slipped 0.6%.
Investor sentiment was hit by another sell-off in technology stocks even as artificial intelligence companies pushed ahead with plans to access public markets.
OpenAI, the maker of ChatGPT, confidentially filed for an IPO on Monday, following a similar move by rival Anthropic last week. Both companies are seeking to raise large sums to fund expansion, while Elon Musk’s SpaceX is reportedly targeting a valuation of about $1.75 trillion in what could become the largest IPO on record.
Investors are now focused on Wednesday’s US inflation data, which is expected to show headline consumer price growth accelerating above 4% in May, partly reflecting the impact of higher energy costs linked to the Middle East conflict.
Among individual movers in London, BT fell 3.5% after Deutsche Bank reiterated a “sell” rating and a 150p price target.
Gold miners also weakened as bullion prices softened, with Fresnillo down 5.1% and Endeavour Mining off 3.8%.
GSK edged 0.5% lower after agreeing a $10.6 billion acquisition of US cancer drug developer Nuvalent, its largest deal since buying Novartis’s vaccines business in 2014.
On the FTSE 250, WPP rose 5.5% after Berenberg initiated coverage with a “buy” rating, arguing the advertising group still benefits from global scale and a strong multinational client base.
Housebuilder Bellway added 3.2% after reaffirming full-year guidance. The company still expects to build 9,300-9,500 homes and deliver underlying operating profit of £320 million-£330 million, though it cautioned that customer demand softened in April and May as mortgage rates rose.