British equities edged lower on Wednesday as uncertainty surrounding U.S.-Iran ceasefire negotiations and ongoing tensions in the Strait of Hormuz outweighed signs of tentative diplomatic progress, reversing earlier gains across London markets.
The FTSE 100 fell 0.09%, underperforming its European peers, while Germany’s DAX rose 0.54% and France’s CAC 40 added 0.35%. Sterling was little changed, trading 0.01% higher at $1.3447 as of 07:22 GMT.
Oil prices retreated after Tuesday’s sharp rally, with Brent crude down 2.20% at $94.56 a barrel and WTI crude falling 2.7% to $91.37, as traders assessed conflicting developments surrounding the Strait of Hormuz and wider Middle East negotiations.
Market sentiment remained fragile after Iran accused the United States of breaching the maritime ceasefire through strikes on targets in southern Iran. Washington said the military response was defensive, citing Iranian drone activity near U.S. naval vessels and reports of speedboats preparing to deploy naval mines, according to the New York Times, citing two U.S. officials.
At the same time, reports that several LNG tankers had recently passed through the Strait of Hormuz improved expectations that the key shipping route could remain operational, easing immediate concerns over global energy supply disruptions and pressuring crude prices lower.
Diplomatic discussions mediated by Qatar also continued, with access to Iran’s frozen overseas assets remaining a central point of disagreement, according to IRGC-linked Tasnim News. The report stated that any potential memorandum of understanding could require the release of approximately $24 billion in blocked Iranian funds.
Separately, internet monitoring group NetBlocks said Iran’s international internet connectivity had been largely restored on Wednesday after 88 days of near-total isolation, a development interpreted by some investors as a tentative confidence-building signal during negotiations.
New Zealand Foreign Minister Winston Peters said he had spoken with Iranian Foreign Minister Abbas Araghchi regarding Tehran’s position in the talks, while reiterating that freedom of navigation through the Strait of Hormuz would be essential for any lasting regional agreement.
However, more hardline rhetoric from Tehran continued to complicate the outlook. A member of Iran’s parliamentary national security committee said the country should make “maximum use” of the Strait of Hormuz because “the world” depends on it, while also calling for changes to the legal framework governing the waterway. Iran’s economy minister separately stated that the country was increasing use of land borders and northern ports to reduce reliance on southern maritime trade routes affected by the U.S. naval presence.
UK Market Round-Up
Pets at Home (LSE:PETS) reported a 30.2% decline in annual underlying pre-tax profit, broadly in line with market expectations, as weaker retail performance and price reductions offset continued growth in its veterinary operations.
Meanwhile, UK energy regulator Ofgem announced that the domestic energy price cap will rise by 13% between July and September, increasing average monthly household bills by around £18 for customers using both gas and electricity. The move reflects higher wholesale energy prices linked to escalating tensions surrounding the Iran conflict.
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