London’s blue-chip market was broadly unchanged on Wednesday, remaining close to multi-week highs as weakness among major energy companies offset gains in housebuilders and mining stocks.
The FTSE 100 traded around the flatline, with falling commodity costs providing some support to consumer-facing businesses but weighing heavily on the index’s large oil producers.
Shell and BP both dropped more than 1.5% as a sharp decline in crude prices put pressure on the energy sector.
Oil retreats as Strait of Hormuz concerns ease
The subdued start followed a stronger previous session for UK equities, when sentiment was supported by the government’s newly announced £10 billion social housing programme aimed at increasing the supply of affordable homes across the country.
On Wednesday, however, energy stocks became one of the main drags on the London benchmark after global oil prices fell by around 2%.
The decline followed reports that Iran and Oman had resumed bilateral discussions focused on managing and potentially reopening the Strait of Hormuz.
The prospect of maritime traffic returning through the strategically important waterway eased immediate concerns about global oil supplies. Brent crude futures subsequently fell towards $86 a barrel, prompting investors to take profits across major energy stocks.
Copper rally supports London-listed miners
Strength in industrial metals provided some support to the wider UK market and helped counter weakness in the oil sector.
Copper climbed to its highest level in six months as inventories held by the London Metal Exchange declined, improving sentiment towards major mining companies.
Rio Tinto PLC (LSE:RIO) and Anglo American PLC (LSE:AAL) benefited from the stronger backdrop for industrial metals as investors assessed the potential impact of tighter copper supplies.
Gold prices, meanwhile, edged lower as markets awaited forthcoming US inflation figures for further indications about the outlook for monetary policy.
With energy stocks under pressure but miners and other areas of the market providing support, the FTSE 100 remained broadly steady near its recent highs.
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