The FTSE 100 was largely flat on Wednesday, with few fresh catalysts to move the dial as Middle East talks dragged on.
Investors were also awaiting several speeches by central bankers that may set the tone for interest rate expectations in the coming months.
Defence stocks were the standout performers on Wednesday after the UK government revealed its defence spending plan.
Although critics will say the outgoing prime minister’s plans don’t go far enough to meaningfully boost the UK’s armed forces, the increased spending is likely to flow into the income statements of UK defence firms.
Babcock was the FTSE 100’s top riser at the time of writing, gaining 4%, while BAE Systems rose 2%.
But any positivity in defence stocks was snuffed out by concerns about developments, or lack of, in the Middle East and upcoming central bank events.
“A new twist with the US/Iran peace talks caused ripples across the market as investors grow tired of non-stop setbacks,” says Russ Mould, investment director at AJ Bell.
“Iran said it would not meet with visiting US envoys, causing equities to pull back and investors to switch to a risk-off mood.
Commodity companies acted as a leading drag on the index as metal prices fell.
“From steel and aluminium to gold and silver, commodity prices have come under fresh pressure as expectations of higher US interest rates have strengthened the dollar, making metals priced in dollars more expensive for overseas buyers,” said Susannah Streeter, Chief Investment Strategist, Wealth Club.
Rio Tinto, Shell, and BP were all down around 1% at the time of writing. Sainsbury’s made notable gains as the rally sparked by a solid trading update continued.