UK equities moved lower on Thursday as investors awaited the latest interest rate decision from the Bank of England, while a sharp decline in crude oil prices weighed heavily on energy stocks.
The FTSE 100 was down 0.54% in early trading, lagging broader European markets. By contrast, Germany’s DAX gained 0.46% and France’s CAC 40 rose 0.25% as investors reacted positively to signs of improving stability in the Middle East.
Labour Market Remains Resilient
Fresh economic data painted a mixed picture of the UK labour market ahead of the central bank’s policy announcement.
Average weekly earnings excluding bonuses remained at an annual growth rate of 3.4% in the three months to April, exceeding economists’ expectations of 3.2%. Meanwhile, the unemployment rate unexpectedly fell to 4.9% from 5.0%.
Total earnings including bonuses increased 4.4% year-on-year, suggesting wage pressures remain relatively firm despite broader signs of economic moderation.
However, other indicators pointed to some cooling in employment conditions. Job vacancies fell by 19,000 to 707,000 during the three months to May, marking the lowest level since early 2021, while the claimant count increased during May.
The figures are likely to leave policymakers balancing concerns about persistent wage growth against evidence of softening labour demand.
Middle East Agreement Pressures Oil Prices
Market sentiment was also influenced by developments in the Middle East after the United States and Iran agreed a 14-point framework aimed at restoring Iranian oil exports and reopening the Strait of Hormuz.
The agreement outlines a pathway toward a broader deal within 60 days, with implementation discussions expected to begin in Switzerland on Friday.
Investors broadly welcomed the development, viewing it as a potential step toward improving energy security and reducing risks to global trade and shipping routes.
The prospect of additional oil supplies returning to international markets pushed energy prices lower.
Brent crude fell 1.5% to $78.35 a barrel, while U.S. benchmark WTI crude declined 2.0% to $75.28 a barrel. Gold moved in the opposite direction, with spot prices rising 1.1% to $4,305.84 per ounce.
Informa Reaffirms Growth Outlook
Among individual stocks, Informa (LSE:INF) traded higher after reiterating its full-year guidance and expressing confidence in stronger growth prospects for 2027.
The events and academic publishing group reported underlying revenue growth of 6.4% during the first five months of 2026, supported by continued strength in its live events business and a recovery from disruption linked to the Iran conflict.
Management maintained its expectation for double-digit growth in adjusted earnings per share this year.
Tesco Maintains Guidance Despite Softer Sales Growth
Tesco (LSE:TSCO) remained in focus after reporting first-quarter UK like-for-like sales growth of 1.8%.
The figure came in below analyst expectations, with the retailer citing ongoing consumer caution and uncertainty linked to geopolitical developments.
Despite the softer sales performance, Tesco maintained its full-year profit outlook and highlighted continued progress across its value-focused strategy, online operations and customer loyalty initiatives.
Investors Await Bank of England Verdict
Attention now turns to the Bank of England’s policy decision, where investors will be looking for clues on the future path of interest rates and the central bank’s assessment of inflation and economic conditions.
With wage growth remaining relatively firm but labour demand showing signs of moderation, markets are likely to scrutinise any changes in tone regarding the outlook for monetary policy over the remainder of the year.
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