Key facts
- The FTSE 100 closed down 141.6 points at 10,670.06.
- Brent crude futures hit a six-week high, trading above $100 a barrel.
- US stocks opened lower amid inflation and interest-rate concerns.
- Energy stocks BP and Shell were among the few risers.
- Gold prices rose to $4,426.90 an ounce as investors sought safe-haven assets.
- The Japanese yen reached a seven-month high against the dollar.
London's FTSE 100 index closed lower on Wednesday, reflecting broader market jitters and mounting inflation concerns driven by a surge in oil prices. The blue-chip index finished down 141.6 points at 10,670.06.
Wall Street also opened in the red, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all trading lower as oil prices topped $100 a barrel, fueling worries about inflation and potential interest rate hikes. The FTSE 100 remained under significant pressure throughout the day, trading near its session low.
Energy stocks were a notable exception, with BP and Shell seeing gains as higher oil prices boosted their performance. Conversely, banks and other sectors experienced declines, indicative of a general risk-off sentiment among investors.
Escalating Middle East tensions contributed to a rise in gold prices, which climbed $71.35 to $4,426.90 an ounce, as investors sought safe-haven assets. The Japanese yen also strengthened, hitting a seven-month high against the US dollar.
Brent crude futures reached a more than six-week high, trading above $100 a barrel due to concerns over potential supply disruptions from attacks on energy infrastructure and shipping routes. This price surge is feeding into fears that inflation could remain elevated.
In UK government debt markets, two- and five-year gilt yields rose to one-week highs as investors reassessed the inflation outlook. Sterling remained firm against the dollar, edging towards two-week highs.
The euro gained 0.18% to $1.1641 ahead of an anticipated rate increase by the European Central Bank on Thursday. Meanwhile, Amazon's debut sterling bond sale highlighted increasing funding demand from technology companies to finance the AI boom, with hyperscalers issuing over $200 billion in debt this year.
Broker activity showed mixed sentiment across London's large and mid-cap stocks. HSBC downgraded Burberry Group to 'hold', while RBC initiated coverage of AstraZeneca with an 'outperform' rating. Deutsche Bank and JP Morgan both cut their price targets for Dunelm.