The FTSE 100 slipped on Wednesday as investors fretted over developments in the Strait of Hormuz and private credit, while digesting mixed corporate updates.
London’s leading index was down around 0.6% at the time of writing as investors assessed the implications of Iran potentially deploying mines in the Strait of Hormuz and what it means for oil and the wider economy.
CNN reported overnight that Iran had begun laying mines in the Strait of Hormuz, which, if true, could close the passage for a prolonged period.
Saudi Aramco added to traders’ tensions on Wednesday by warning of ‘catastrophic consequences’ if the strait, which usually sees around 20% of the world’s oil pass through, doesn’t resume normal operations soon. The IEA provided some short-term reassurance with plans to release oil from strategic reserves to help stabilise energy markets, if required.
With markets trading headline-to-headline, the latest threat to oil supply erased a large proportion of the FTSE 100’s gains from yesterday.
“The relief rally which took hold after comments from Donald Trump that the Iran war was close to ending has proved as short-lived as a mayfly’s lifespan,” said Dan Coatsworth, head of markets at AJ Bell.
“While investors have not returned to the panic mode seen at the start of the week, with extraordinary swings in the oil price and plunging market values, there is genuine trepidation.”
Rising oil prices on Wednesday helped ignite fresh fears about the trajectory for interest rates. There is a growing chorus of analysts and commentators suggesting that both the ECB and Bank of England will be required to hike rates – the last thing equity bulls want to see.
The vast majority of FTSE 100 stocks were in the red on Wednesday, with miners and financials among the top fallers. Smiths Group was the top faller, losing 6%.
Legal & General
Poor corporate updates also weighed on the FTSE 100 on Wednesday, with Legal & General shares sinking 5% after releasing underwhelming 2025 results.
Matt Britzman, senior equity analyst, Hargreaves Lansdown, explained that the group’s profit was in line with expectations, but areas of weakness, such as solvency ratios, dragged shares lower.
“Legal & General’s full‑year results had a few moving parts, some slightly better, some a touch weaker, but ultimately landed broadly in line with expectations,” Britzman said.
“Core operating profit came in close to consensus, while capital generation was a little stronger than forecast, helping support the expected £1.2bn share buyback following the sale of its US protection unit.
“Overall, it was a steady set of numbers, but a couple of softer areas have weighed on shares in early trading.”
Private Credit Funds
If poor corporate results and a war in the Middle East weren’t enough to contend with, investors also have to work through jitters in the private credit markets and consider whether they were signs of another impending financial crisis.
After BlackRock was forced to limit withdrawals from its private credit funds in recent days, JPMorgan has written down the value of its private credit portfolios, particularly assets related to AI, adding to concerns about a wider financial impact.
“News that JPMorgan has downgraded a number of investments within their private credit portfolio adding to “cockroaches” concerns,” said Emma Wall, Chief Investment Strategist, Hargreaves Lansdown
“Market watchers may remember it was JPM’s chief, Jamie Dimon, who remarked last year following the failure of US sub-prime lender Tricolor: “When you see one cockroach, there are probably more”. A few weeks later, five US regional banks revealed they had made a series of bad loans linked to the troubled California real estate market, sending share prices down and lawsuits up.
“The downgrades this week, reported in the FT, are for software companies, which have come under pressure in the public markets in recent months too – thanks to AI disruption concerns.”