The FTSE 100 fell on Wednesday and the oil price climbed amid fresh geopolitical uncertainty while the S&P 500 briefly topped 7,000 for the first time ahead of tech earnings and the US interest rate call.
The FTSE 100 index closed down 53.37 points, 0.5%, at 10,154.43. The FTSE 250 ended 13.39 points lower, 0.1%, at 23,390.63 but the AIM all-share ended up 7.27 points, 0.9%, at 832.09.
US President Donald Trump warned Iran that time was running out for the Islamic republic to prevent American military intervention as Tehran rejected holding negotiations against a backdrop of threats.
Mr Trump has never ruled out a new attack on Iran in the wake of its deadly crackdown on protests this month, to follow the 12-day June war between the Islamic republic and Israel which the US backed and joined.
A US naval strike group that Mr Trump described as an “armada” led by aircraft carrier the USS Abraham Lincoln is now lurking in Middle East waters.
For its part, Iran will deliver an unprecedented retaliation to any US attack, its mission to the United Nations said.
The unrest saw a spike in the oil price. Brent oil was quoted at 68.01 dollars a barrel at the time of the London equities close on Wednesday, up from 65.92 late on Tuesday.
The gains supported oil majors BP and Shell, up 1.0% and 1.3% respectively.
In European equities on Wednesday, the CAC 40 in Paris closed down 1.1%, while the DAX 40 in Frankfurt ended down 0.3%.
The pound was quoted at 1.3778 dollars at the time of the London equities close on Wednesday, higher compared to 1.3765 on Tuesday.
The euro stood at 1.1935 dollars, lower against 1.1969.
Stocks in New York were slightly higher at the time of the London close.
The Dow Jones Industrial Average was up 0.1%, as was the S&P 500 index and the Nasdaq Composite.
The S&P 500 briefly surpassed the 7,000 milestone for the first time, taking 12 month gains to 15%.
The yield on the US 10-year Treasury was quoted at 4.26%, widened from 4.22%. The yield on the US 30-year Treasury was quoted at 4.87%, stretched from 4.82%.
Technology stocks were in demand ahead of earnings from Tesla, Microsoft and Meta Platforms after the market close.
Ahead of those earnings the Federal Reserve is widely expected to leave interest rates unchanged.
Kathleen Brooks, research director at XTB, noted there is less than a 3% chance of a rate cut being priced by the Federal Funds Futures market and interest rates are expected to remain unchanged at 3.5%-3.75%.
Ms Brooks expects Fed chairman Jerome Powell to use his post-decision press conference to signal maximum flexibility when it comes to future rate decisions.
“The Fed wants to keep its options open, and Powell is likely to reiterate that future policy decisions will be based on the evolving economic outlook. For now, the Fed is on hold and remains in data-watch mode,” she commented.
In Canada, the Bank of Canada kept interest rates on hold but said the outlook is vulnerable to unpredictable US trade policies and geopolitical risks.
The BoC left the overnight rate at 2.25%, in line with FXStreet consensus. It had also left rates unchanged in December, after making a quarter-point cut in November.
Back in London, fresh gains in the gold price pushed Endeavour Mining up 4.3%.
But Fresnillo fell 0.6% after it said its annual production met or beat guidance last year, though it lowered output forecasts for 2026.
Burberry was knocked by mixed results from French peer LVMH, which slumped 7.9% in Paris.
London-based fashion Burberry was 4.7% lower as LVMH also warned of the unpredictability of its performance in the short-term.
Boohoo climbed 5.5% as it raised profit guidance amid strong trading at Debenhams and an improved showing from Pretty Little Things.
The biggest risers on the FTSE 100 were Endeavour Mining, up 186.0p at 4,530.0p, Scottish Mortgage Investment Trust, up 25.5p at 1,235.5p, Persimmon, up 26.5p at 1,449.5p, Centrica, up 3.4p at 190.9p and DCC, up 82.0p at 4,662.0p.
The biggest fallers on the FTSE 100 were Burberry, down 55.0p at 1,115.0p, Smiths Group, down 86.0p at 2,530.0p, AstraZeneca, down 372.0p at 13,508.0p, Rolls Royce, down 32.0p at 1,208.0p and Airtel Africa, down 9.0p at 351.6p.
Thursday’s economic calendar has trade data from Canada and US, plus US initial jobless claims and factory orders figures.
Thursday’s UK corporate calendar has full-year results from lender Lloyds Banking Group and trading statements from miners Glencore and Antofagasta plus budget airline easyJet.
– Contributed by Alliance News
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