London equities are expected to open higher on Wednesday, supported by a pullback in oil prices and improving sentiment around a potential de-escalation in the Iran conflict.
Futures data indicate a 110-point gain for the FTSE 100, suggesting a 1.1% rise at the open. The index had already closed 1.6% higher in the previous session at 10,127.96, reflecting broader strength in global markets.
Investor sentiment has been buoyed by comments from Donald Trump, who signalled that the conflict with Iran could end within weeks. Markets have interpreted this as a potential easing of geopolitical risk, particularly given the Strait of Hormuz’s strategic importance.
Oil prices have been a key driver of the improved tone, with Brent crude oil falling to $103.73 per barrel from $112.46 previously. The decline has helped ease near-term inflation concerns and reduced pressure on energy-sensitive sectors.
In currency markets, Pound sterling strengthened against the US dollar to $1.3262, while weakening slightly against the euro, which traded at $1.1575. The US dollar also softened marginally against the yen, suggesting a modest shift away from safe-haven demand.
Global equity markets provided a supportive backdrop. In the US, the S&P 500 rose 2.9% and the Nasdaq Composite gained 3.8%, while in Asia, Japan’s Nikkei 225 surged 5.0%, alongside gains across Chinese and Hong Kong benchmarks.
In the UK, focus turns to Keir Starmer, who is expected to provide an update on cost-of-living pressures as energy price risks remain elevated. Chancellor Rachel Reeves has indicated that any government support would likely be targeted based on household income, though no immediate relief measures have been confirmed.
Despite the stronger tone, markets remain sensitive to geopolitical developments, with further volatility likely depending on the trajectory of oil prices and progress toward any resolution in the conflict.
