The FTSE 100 traded flat to slightly lower at the open as investors monitored rising Middle East tensions and speculation that Andy Burnham could enter the race to challenge Prime Minister Keir Starmer. Oil prices proved decisive, with BP up 1.1%, Shell up 0.9%, and BAT up 1.8%, as oil prices climbed amid ongoing US and Iran tensions over the Strait of Hormuz.
The rally accelerated as the session wore on, driven by renewed anxiety over the fragile ceasefire between the US and Iran. Rising tensions between the US and Iran drove oil prices and government borrowing costs higher, pushing Brent crude above $111 a barrel.
Diversified Gainers Emerge
Top gainers were Whitbread (1.82%), WPP (1.55%) and Imperial Brands (1.54%). The diversified gains across consumer and media stocks suggested the index move was more than just energy-driven strength.
Mining Weakness Persists
Biggest losses came from 3i (-3.67%), Vistry Group (-3.38%) and Barratt Redrow (-2.09%), with mining names also under pressure.
Anglo American fell more than 2% and Glencore lost around 1%. The miner weakness reflected concerns over metal prices and slowing global demand, competing with oil’s geopolitical premium.
Political Risk Lingers
The rally came despite mounting anxiety over the Labour government’s stability. A key concern is that the UK has become ungovernable as it has had 6 prime ministers in the last decade.
The FTSE 100 Index has retreated sharply in the past few weeks and underperformed its global peers like the S&P 500, Nasdaq 100, and Kospi. Political uncertainty remains a persistent drag on valuations.
Week Ahead Critical
The UK will publish the latest inflation and jobs numbers this week, and top companies like BT Group, Marks & Spencer, and Sage will release their earnings. Any sign of softer inflation could ease pressure on bond yields and unlock fresh buying interest.