London stocks are set for a weaker start on Wednesday as investors weigh renewed tensions surrounding the Strait of Hormuz, ongoing UK political developments and continued weakness in US technology shares.
FTSE 100 futures indicate the index will open around 38 points lower, or 0.4%, after the benchmark closed marginally down on Tuesday at 10,428.85.
Market sentiment has been dented after US Secretary of State Marco Rubio rejected suggestions that Iran could impose tolls or fees on vessels using the Strait of Hormuz. The comments followed a joint statement from Iran and Oman indicating they would examine future administration arrangements for the strategically important shipping route while maintaining Iranian sovereignty claims over the waterway.
The dispute has reintroduced an element of uncertainty into Middle East diplomacy, although oil prices continued to edge lower, with Brent crude trading around $76.30 per barrel.
In the UK, political attention remains focused on the transition of power following Keir Starmer’s resignation. Starmer has now held face-to-face talks with likely successor Andy Burnham and pledged a smooth handover process. The outgoing Prime Minister is also expected to meet European leaders in Berlin later today to discuss Ukraine, NATO burden-sharing and efforts to secure a lasting resolution to the Iran conflict ahead of next month’s NATO summit.
Currency markets were relatively stable overnight. Sterling traded slightly lower against the US dollar but strengthened modestly against the euro, while UK gilt markets remained broadly steady.
Wall Street provided little support overnight, with technology and artificial intelligence stocks extending recent losses. The Nasdaq fell 2.2%, the S&P 500 declined 1.4% and the Dow Jones slipped 0.1% as investors continued to take profits from the sector’s strong rally earlier this year.
Asian markets were mixed, with gains in Hong Kong and Australia offset by declines in Japan. The Nikkei 225 fell 0.4%, while Hong Kong’s Hang Seng added 0.5%.
Gold prices also eased, falling to $4,079 per ounce, reflecting a modest reduction in demand for traditional safe-haven assets.
