11th Aug 2026 17:05
(Alliance News) - The FTSE 100 closed lower on Tuesday with gains in oil stocks, amid ongoing uncertainty in the Middle East, offset by caution ahead of US inflation data and weak insurers.
The FTSE 100 index closed down 18.31 points, 0.2%, at 10,844.19. The FTSE 250 ended up 55.21 points, 0.2%, at 24,799.75, while the AIM All-Share closed up 3.19 points, 0.4%, at 799.57.
The Cboe UK 100 was down 0.2% at 1,078.18, the Cboe UK 250 was 0.2% higher at 21,589.07, and the Cboe Small Companies ended slightly lower at 18,966.46.
Oil prices pushed up once more, touching USD90 a barrel early in the session, with the US and Iran appearing to not make much progress towards a deal to reopen the Strait of Hormuz.
One hopeful development saw Pakistan's defence minister state the two countries are "close to some sort of arrangement" over the Strait of Hormuz, the key shipping route.
"Things are shaping up in favour of peace," Khawaja Asif told reporters in Islamabad on Tuesday, without giving details of any breakthrough.
The more upbeat statement came after US President Donald Trump appeared to harden his stance on Monday, saying Tehran should pay reparations for those killed in attacks linked to the Islamic Republic as well as in domestic protests.
Brent oil for October delivery traded higher at USD88.22 a barrel on Tuesday afternoon, from USD86.35 late Monday. The gains saw oil majors and index heavyweights BP and Shell in the green, up 2.2% and 1.8% respectively.
Elsewhere, investor attention is switching to Wednesday's US inflation data which, after Friday's soft US jobs report, could further reduce fears of a Federal Reserve rate hike.
"We expect US rates and the USD to react more to a downside print than to an equally sized upside print. While an upside print should put the September Federal Open Market Committee firmly in play, the decision would still likely hinge on August data, given Chair Warsh's apparent reluctance to hike.
"Conversely, a soft print would all but rule out a September hike," said Bank of America analysts Alex Cohen, Stephen Juneau and Meghan Swiber.
BofA forecast headline CPI likely rose by a "modest" 0.1% on-month and 3.4% on-year in July. For core CPI, it forecast a 0.20% on-month increase and 2.5% on-year, which would be the lowest reading since January.
David Morrison, senior market analyst at Trade Nation, noted the probability of at least one 25-basis point rate hike from the Federal Reserve before year-end remains extremely high at around 80%.
"Investors are calculating that the Fed is far more worried about oil-led inflation than it is about underlying weakness in the economy which is showing up in a rapidly deteriorating labour market. Something has got to give.
"Could it be that the market suddenly starts pricing out rate hikes and pricing in rate cuts, in a complete inversion of what happened earlier this year?," Morrison added.
The pound traded at USD1.3509 on Tuesday afternoon, down from USD1.3522 at the equities close on Monday. Against the euro, sterling softened to EUR1.1706 from EUR1.1708.
The euro stood lower at USD1.1541 against USD1.1549. Against the yen, the dollar was higher at JPY159.28, compared to JPY158.92.
The yield on the US 10-year Treasury eased to 4.69% on Tuesday from 4.70% on Monday. The yield on the US 30-year Treasury was flat at 5.24%.
In European equities on Tuesday, the CAC 40 in Paris closed down 0.1%, while the DAX 40 in Frankfurt ended 0.3% higher.
Stocks in New York were lower. The Dow Jones Industrial Average was down 0.1%, as was the S&P 500 index, while the Nasdaq Composite fell 0.2%.
Back in London, the insurance sector was on the wane. Legal & General was down 3.1% and M&G 3.3% lower, after UBS cut both to 'sell'. Goldman Sachs also cut Legal & General to 'sell'.
UBS said it prefers both Standard Life and Aviva, though shares in the duo fell 3.3% and 1.4%, respectively. Prudential was also in the red, down 2.9%, and Admiral fell 2.1%.
Noting L&G's recent share price strength UBS analyst Nasib Ahmed said the higher valuation potentially leads to "greater scrutiny on growing risk".
In Ahmed's view, these risks include increased competition: a falling solvency ratio and distributable earnings; high sensitivity to credit events; and a low take-out risk.
At M&G, Ahmed sees the around 6% 2028 forecast yield as no longer attractive on a relative basis.
The broker also flagged potential constraints to shareholder distributions due to distributable earning headwinds within M&G's insurance business.
Leading the blue-chip fallers, Spirax fell 5.6% as an unchanged outlook weighed on shares in the thermal energy and fluid technology company.
AJ Bell analyst Dan Coatsworth said: "Investors were disappointed by the lack of upgrades to earnings guidance."
JPMorgan analyst Chitrita Sinha said the STS division margin miss also attracted attention on the earnings call but felt the share price was overdone.
"The STS miss has been a focus this morning and on the call management explained that order momentum has been picking up," Sinha said.
"The Middle East also contributed negatively to STS, which means the underlying growth was even better. Management is confident on the H2 STS margins given the visibility of shipments that were pushed into H2, lower investments than in H1 and IP growth which should accelerate," the analyst added.
Gold traded at USD4,376.20 an ounce on Tuesday, up from USD4,350.91 on Monday.
The biggest risers on the FTSE 100 were St James's Place, up 36.50p at 1,176.50p, Compass, up 0.91p at 33.03p, Endeavour Mining, up 109.00p at 4,183.00p, Entain, up 12.80p at 554.80p and IG Group, up 30.00p at 1,390.00p.
The biggest fallers on the FTSE 100 were Spirax, down 425.00p at 7,225.00p, M&G, down 12.00p at 350.40p, Standard Life, down 30.50p at 902.00p, Legal & General, down 9.60p at 301.60p, and Prudential, down 30.00p at 1,012.50p.
Wednesday's global economic calendar has inflation figures in the US and Germany.
Wednesday's UK corporate calendar has half-year results from Balfour Beatty and Evoke.
By Jeremy Cutler, Alliance News reporter
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