The FTSE 100 gained on Wednesday and looked set to extend its winning streak to a third day as energy prices showed further signs of stabilisation.
London’s leading index was comfortably above 10,400 at 10,431 at the time of writing.
“Talk of a deal between Iraq and Turkey to restart oil supplies has helped to calm financial markets,” says Russ Mould, investment director at AJ Bell.
“This provided some relief to investors on the edge of their seats amid worries about disruptions to oil supplies. While the news helped to nudge down Brent prices by 0.5% to $102.89 a barrel, getting the commodity value significantly lower still depends on resolving issues around the Strait of Hormuz.”
Although there is still a significant threat to oil supplies from the Middle East, there are signs that initial fears of a prolonged shutdown look overblown.
Iran is reportedly allowing select tankers from ‘friendly’ nations to pass through the Strait, which will help ease concerns about an oil shock. But the situation remains fluid, with news breaking that major gas fields in the Middle East were under attack as this article was being written.
The marginal improvement in the perceptions of the situation in the Middle East filtered through to buying pressure in the FTSE 100’s cyclical sectors on Wednesday, with miners, banks, and airlines rallying.
Easyjet rose 3.4% while IAG added 2.6%.
Diploma was the FTSE 100’s top riser after the group wowed investors with a ‘significant’ upgrade to its guidance as strong performance continued into its H1.
Diploma shares were 17% higher at the time of writing, following the group’s increase in revenue guidance to 9% from 6% and in operating margin guidance to 25% from 22.5%. The result was a 13% upgrade to operating profit.
Babcock shares were 3% higher, as were Rolls-Royce shares, as investors picked up engineering and defence stocks.
Stabilising oil prices dented demand for BP and Shell shares, which were both down around 1%.
Prudential was among the fallers, dipping 2%, as investors digested the Asia-focused group’s 2025 results.
“Generous shareholder returns help demonstrate management’s faith in Prudential’s prospects as the company announced robust full-year results,” Russ Mould said.
“However, the market remains nervous about the business – likely in part thanks to current global tensions and an energy crisis which looks like it could disproportionately impact Asia.
“The attraction to Prudential of the African and Asian markets it has focused on since exiting most of its businesses in the developed world around the turn of the decade is their greater growth potential.”