UK equities traded lower on Wednesday as escalating hostilities in the Middle East dampened investor sentiment and pushed oil prices higher, while a lack of progress towards a peace agreement kept markets on edge.
The benchmark FTSE 100 index fell 0.2% to 10,350.5 points by 1013 GMT.
The mid-cap FTSE 250 index also declined, slipping 0.1%.
Middle East tensions weigh on investor sentiment
Market sentiment weakened after hostilities in the Gulf intensified.
An Iranian missile attack damaged Kuwait’s airport, while the US military carried out strikes near the Strait of Hormuz.
The renewed tensions triggered a sharp rise in oil prices, with crude gaining around 3% as concerns over regional stability and energy supplies increased.
The move supported energy-related stocks, making them one of the strongest-performing segments of the UK market during the session.
Shares of UK energy firms rose 1.3% as investors responded to higher crude prices and the potential implications of continued geopolitical instability in the region.
Healthcare and Mining stocks decline
Despite gains in the energy sector, weakness across several major sectors weighed on the broader market.
Healthcare stocks were among the largest drags on the FTSE 100.
Drugmaker AstraZeneca fell 2.2%, contributing significantly to losses in the sector.
Mining shares also came under pressure.
Precious metal miners and industrial metal miners both declined by more than 1% as metal prices retreated.
The declines in healthcare and mining stocks offset gains seen in energy-related companies, limiting the broader market’s ability to recover from early losses.
Ninety one and Bridgepoint fall
Among individual stocks, investment manager Ninety One dropped 6.4%.
Analysts cited smaller-than-expected net inflows during the second half of 2026 as a key factor behind the decline in the company’s share price.
Bridgepoint Group also traded lower, falling 3.4%.
The decline followed news that Switzerland-based Partners Group would cap withdrawals from an $8.6 billion private equity fund.
B&M and Debenhams lead market gainers
In contrast to the broader market weakness, several retail-focused companies posted strong gains after releasing updates that were positively received by investors.
Shares of discount retailer B&M surged 16.1% after the company reported a smaller-than-expected decline in annual pretax profit.
Debenhams Group was among the session’s strongest performers, jumping 22.3%.
The online fashion retailer reported a return to growth, posting a 0.5% increase in first-quarter gross merchandise value.
The company also reported a “substantial” increase in core profit, helping boost investor confidence.
Economic data highlights business pressures
On the economic front, British services firms faced mounting pressure in May.
The impact of the Iran war increased costs for businesses and weighed on overall optimism within the sector.
Meanwhile, the Organisation for Economic Co-operation and Development (OECD) revised its outlook for the UK economy.
The organisation scaled back an earlier assessment of the immediate impact of the Iran war on British growth and inflation this year.
However, the OECD now expects a weaker recovery in 2027 compared with the forecasts it published in late March, indicating that longer-term economic challenges may persist despite a reduced near-term impact.
The post FTSE 100 dips as Middle East conflict fuels oil rally appeared first on Invezz