The FTSE 100 closed 0.3% lower at 10,708.33 on Tuesday, while the FTSE 250 edged 0.1% higher to 24,526.45, as investors weighed weaker oil prices against hopes for diplomatic progress between the US and Iran.
Brent crude fell below $100 a barrel to around $99.39, helped by improved supply prospects and Iran signalling that it could reopen the Strait of Hormuz within seven days if the US reduced military pressure and lifted restrictions on Iranian ports. Saudi Arabia has also resumed flows through its East-West pipeline, adding to expectations for improved Gulf supply.
UK public finances remained another concern. The government borrowed £18.3 billion in August, around £2.9 billion more than a year earlier, as spending growth outpaced receipts.
On the FTSE 100, Kingfisher jumped around 12% after lifting full-year profit guidance, while Smiths Group gained 7.5% after stronger-than-expected operating profit and further strategic action.
JD Sports rose 6.4% ahead of Wednesday’s half-year results, while lower oil prices supported British Airways owner IAG.
Defence stocks weakened as Middle East risk premiums eased, with BAE Systems and Babcock International both falling, while Standard Chartered also declined amid renewed scrutiny of sanctions and financial-crime risks.
US markets were more subdued after Monday’s technology rally, with the Nasdaq still supported by continuing enthusiasm around Meta’s Muse AI platform. Bond yields remained elevated, with the US 10-year Treasury close to 4.96%.
For London investors, the immediate focus now turns to Wednesday’s UK PMI readings and JD Sports results, while oil prices and developments around US-Iran diplomacy remain important drivers for energy, defence and inflation-sensitive shares.
