The FTSE 100 surrendered early advances to close lower on Thursday as oil prices resumed their climb amid the ongoing Middle East crisis. The index ended down 153.71 points, or 1.5%, at 10,413.94, while the FTSE 250 fell 196.47 points, or 0.9%, to 22,700.20. The Aim All-Share dropped 6.20 points, or 0.8%, to 788.36.
“While images of war continue to roll across screens around the globe, and Iranian missiles and drones attack other countries, markets have little upon which to base a sustained rally,” said Chris Beauchamp, chief market analyst at IG. The Iran conflict entered its sixth day with no immediate prospect of resolution, rattling financial markets.
Rising energy costs have boosted inflation expectations, diminishing hopes for interest rate cuts and sending bond yields higher. The yield on the US 10-year Treasury rose to 4.15% from 4.07%, while the 30-year yield widened to 4.76% from 4.71%. Central bank meetings in the US, UK, Europe and Japan are due in two weeks, with policymakers facing a new dilemma following the supply shock from tariffs.
Brent oil traded at $84.41 a barrel on Thursday afternoon, up from $80.75 at the same time on Wednesday. “Oil prices remain elevated, and as things stand there’s no sign that either WTI or Brent looks set to reverse direction,” said David Morrison at Trade Nation. He noted that oil has been driven by headlines concerning the Middle East hostilities, particularly around the Strait of Hormuz.
In London, investors also digested a raft of earnings. Rentokil Initial rose 11% after reporting better-than-expected growth in its key North American business, with organic revenue growth of 3.6% in the fourth quarter. Admiral climbed 7.6% as it hiked its dividend following a 14% rise in annual pre-tax profit to £954.8 million. However, Reckitt Benckiser fell 5.8% after warning that a weak cold and flu season would hit the first quarter of 2026 and that European trading remains challenging.
