London stocks closed lower on Thursday as rising oil prices, renewed tensions in the Middle East and weaker UK manufacturing activity weighed on investor confidence, despite strong gains for London Stock Exchange Group and Rentokil Initial.
The FTSE 100 declined 0.26% to close at 10,725.03, while the domestically focused FTSE 250 fell 0.93% to 24,211.71, reflecting broader pressure on UK equities.
Energy markets remained unsettled following reports that the United States and Israel were considering further military action against Iran after the US midterm elections, potentially targeting energy infrastructure.
Tensions increased following reported attacks on Saudi Arabian facilities, including the Shaybah oil field and King Fahd International Airport, raising concerns about further disruption to regional energy supplies.
Higher oil prices continue to pose a risk to global inflation, potentially increasing fuel, transportation and manufacturing costs while complicating interest rate decisions by major central banks.
At home, the latest Confederation of British Industry Industrial Trends Survey indicated a further deterioration in manufacturing activity, with the output volumes balance falling to minus 10% in the three months to October, compared with minus 4% in the previous survey.
Output weakened across 11 of the 17 manufacturing subsectors, particularly food, drink and tobacco, chemicals, and metal products.
The total new orders balance improved to minus 16% from minus 24% in July, although domestic and export demand remained subdued.
Despite the wider market decline, London Stock Exchange Group surged 7.85% after announcing a proposed $3.54 billion cash acquisition of credit information platform Octus from investment group Permira.
The exchange and financial data operator also reported third-quarter total income of £2.41 billion, up from £2.22 billion a year earlier, demonstrating continued growth across its operations.
Rentokil Initial jumped 8.36%, becoming the FTSE 100’s strongest performer, after reporting third-quarter revenue growth and announcing a new $200 million share buyback programme.
The pest control group also confirmed that Chief Financial Officer Paul Edgecliffe-Johnson plans to retire.
RBC Capital Markets welcomed the update, highlighting potential cost savings, operational improvements and opportunities to simplify the business, while maintaining its positive investment outlook.
However, J Sainsbury shares fell 2.4% despite reporting stronger underlying operating profitability during the first half of its financial year.
The supermarket group recorded a statutory loss after tax of £164 million, compared with a £155 million profit a year earlier, primarily reflecting discontinued operations associated with its planned Argos disposal.
Analysts at Bernstein described the results as mixed, with weaker-than-expected like-for-like sales offset by improved operating profit, while investors also assessed the company’s guidance and capital return plans.
The contrasting performances of LSEG, Rentokil and Sainsbury highlight the importance of company-specific results, with strong earnings and shareholder returns supporting selected stocks despite the wider market weakness.
The FTSE 100’s decline also reflects continuing concerns over geopolitical risks, energy prices and the resilience of the UK economy, particularly as manufacturers contend with weak order books and elevated operating costs.
Investor attention will now turn to further corporate earnings, movements in oil prices and upcoming economic data, as markets assess whether inflationary pressures and slowing manufacturing activity will place additional strain on UK businesses.
