The FTSE 100 traded slightly lower on Friday, 16 October 2026, as investors assessed developments in the Middle East, elevated energy prices and reports of potential changes to UK banking taxation ahead of the government’s October Budget.
London’s benchmark index declined 0.18% as of 07:16 GMT, following a 1.08% advance in the previous session that took the index to its highest closing level in more than six weeks.
European equity markets were mixed, with Germany’s DAX rising 0.61% and France’s CAC 40 falling 0.08%. Sterling strengthened 0.33% against the US dollar to $1.3318.
Oil prices remained elevated despite modest declines during early trading, while gold advanced as investors monitored geopolitical developments and their potential implications for energy supplies.
Brent Crude Trades Above $105 as Strait of Hormuz Remains in Focus
Brent crude futures declined 0.67% to $105.21 per barrel, while US West Texas Intermediate futures fell 0.76% to $97.24.
Energy markets continued to assess developments involving Iran and shipping through the Strait of Hormuz, a major route for international oil and gas transportation.
Iranian army commander-in-chief Amir Hatami said the strait would remain closed until Iran’s demands were addressed, according to the country’s Mehr news agency. He also described shipping traffic through the waterway as extremely limited.
However, US Central Command said on Thursday that the United States and its regional partners maintained control of the strait and that commercial vessels continued to transit the waterway.
The differing statements highlighted continued uncertainty surrounding shipping conditions and the extent of disruption to regional energy exports.
US President Donald Trump, speaking in an interview with Newsmax on Thursday, said he would not use nuclear weapons against Iran and did not envisage deploying American ground troops there.
Meanwhile, US Treasury Secretary Scott Bessent indicated that economic sanctions against Iran would continue. His comments followed the announcement of sanctions targeting 16 individuals and 10 entities.
ING Highlights Continued Risk Premium in Oil Markets
Analysts Warren Patterson and Ewa Manthey at ING said crude prices continued to reflect a substantial geopolitical risk premium associated with the Middle East conflict.
The analysts indicated that a comprehensive agreement between the United States and Iran would be required for that premium to be fully removed.
ING also reported that members of the International Energy Agency had agreed to release the remaining 100 million barrels from a previously announced 400 million-barrel emergency oil reserve commitment made in March.
According to the bank, approximately 20 million barrels of the remaining release would consist of diesel, compared with an earlier indication of around 50 million barrels.
The smaller diesel allocation could renew discussion in Washington over potential restrictions on diesel exports.
Separately, media reports indicated that US authorities were considering easing sanctions on certain tankers associated with the shadow fleet in an effort to reduce shipping costs.
No final decision on those potential sanctions changes was reported.
Gold Prices Advance as Investors Monitor Geopolitical Developments
Gold prices moved higher during Friday’s early trading session.
Gold futures rose 0.86% to $4,205.95 per ounce, while spot gold increased 0.34% to $4,184.72.
The gains came as financial markets continued to assess geopolitical developments, energy supply conditions and the broader economic implications of the Middle East conflict.
Sterling also strengthened against the US dollar, trading at $1.3318, an increase of 0.33%.
European equity markets showed mixed performance, with gains in Germany contrasting with modest declines in France and the United Kingdom.
UK Government Reportedly Considering Higher Bank Taxes
UK financial markets were also assessing reports that the government could increase taxes on banks in its Budget scheduled for 28 October.
Bloomberg reported, citing people familiar with the discussions, that Chancellor John Healey was considering raising the bank corporation tax surcharge to help finance cost-of-living measures and support the public finances.
The surcharge currently stands at 3%, having previously been set at 8% until 2023.
According to the report, restoring the surcharge to its previous level could generate approximately £2 billion in additional revenue.
The Guardian had separately reported the potential proposal on Thursday.
Speaking to reporters during International Monetary Fund meetings in Bangkok, Healey declined to rule out an increase, indicating that decisions would be announced in the forthcoming Budget.
No final tax changes have been confirmed.
Cost-of-Living Measures Under Consideration Ahead of Budget
The government is also considering additional support for households facing higher energy and mortgage costs following the conflict involving Iran.
Prime Minister Andy Burnham has indicated that the government intends to provide financial relief to affected households.
Healey said any support measures would be temporary and targeted.
Options reportedly under consideration include expanding assistance through the £150 warm homes discount and maintaining a freeze on fuel duty.
Bloomberg also reported that higher government borrowing costs had reduced the Treasury’s available fiscal headroom.
The report indicated that the £23.6 billion fiscal buffer inherited by Healey from Rachel Reeves had been reduced by approximately half.
The scale and funding of any additional household support measures are expected to become clearer when the Budget is presented on 28 October.
Ofgem Consults on Energy Market Stabilisation Measures
UK energy regulator Ofgem has launched a consultation on whether to activate its market stabilisation charge ahead of winter.
The mechanism is intended to help protect energy suppliers against the financial effects of volatility in wholesale energy prices.
The consultation comes amid elevated international energy costs and uncertainty surrounding future oil and gas supplies.
Any decision to activate the mechanism would follow the regulator’s assessment of market conditions and the consultation process.
Ithaca Energy Begins CEO Succession Process
In company news, Ithaca Energy (LSE:ITH) announced that Chief Executive Officer Luciano Vasques intends to retire by 31 March 2027.
The company’s board has begun a search for his successor.
The announcement provides a timetable for the planned leadership transition, with the board responsible for identifying and appointing a replacement.
Man Group Reports Record Assets Under Management of $270.9 Billion
Man Group (LSE:EMG) reported record assets under management of $270.9 billion at the end of September 2026.
The figure represented a quarterly increase of 6.8% and exceeded market expectations.
The investment management company recorded $10.1 billion in net client inflows during the third quarter, contributing to the expansion of its assets under management.
The results reflected continued investor allocations to the group’s investment strategies alongside changes in the value of managed assets.
FTSE 100 Investors Assess Energy Prices and UK Fiscal Outlook
Friday’s trading session reflected several developments affecting UK and European financial markets, including geopolitical uncertainty, elevated oil prices and expectations surrounding the forthcoming UK Budget.
The FTSE 100’s modest decline followed a stronger session on Thursday, while other major European indices moved in different directions.
Energy market developments, potential changes to bank taxation and the government’s planned household support measures remain among the issues being assessed by investors.
The UK Budget is scheduled for 28 October, with decisions on taxation and fiscal support measures yet to be announced.
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