Markets open lower ahead of key economic updates
The FTSE 100 traded lower on Wednesday as investors adopted a cautious stance at the beginning of the new quarter, awaiting global manufacturing PMI releases, developments in Iran-Qatar negotiations and fresh comments from Bank of England Governor Andrew Bailey on the inflation outlook.
The FTSE 100 fell 0.29% in early trading. Germany’s DAX eased 0.03%, while France’s CAC 40 declined 0.49%. Sterling also weakened against the US dollar, with GBP/USD falling 0.23% to 1.3232.
Geopolitics and inflation remain in focus
Investor sentiment was influenced by renewed diplomatic efforts in Doha, where Qatar’s Prime Minister met US envoys Steve Witkoff and Jared Kushner alongside Iranian negotiators for technical discussions described by Qatar’s foreign ministry as taking place “whether direct or indirect.”
Meanwhile, Iran’s chief negotiator, Mohammad Bagher Ghalibaf, described the Strait of Hormuz as Tehran’s “greatest instrument of power,” adding that negotiations on a final agreement would not begin until the provisions of the existing memorandum of understanding had been implemented.
Speaking to CNBC, Bank of England Governor Andrew Bailey said inflation would likely have returned to the central bank’s 2% target around April or May had it not been for the recent conflict.
“It’s going to take longer,” Bailey said, pointing to a weakening economy and a softer labour market as factors allowing policymakers to remain patient despite some members of the Monetary Policy Committee favouring tighter monetary policy.
UK inflation currently stands at 2.8% and is expected to rise towards 3.2% later this year as higher energy prices continue to feed through into the economy.
UK housing market shows mixed picture
New data from Nationwide showed annual UK house price growth accelerated to 2.2% in June from 1.7% in May, although prices were unchanged on a seasonally adjusted monthly basis. The average UK home is now valued at £277,484.
Chief Economist Robert Gardner said the housing market had “softened a little in recent months” because of uncertainty surrounding the Middle East, higher energy prices and elevated mortgage rates. However, he noted that the Iran-US memorandum of understanding had helped reduce oil prices from recent highs, potentially easing pressure on interest rates.
Northern Ireland remained the UK’s strongest-performing housing market with annual price growth of 8.6% during the second quarter, while the Outer South East recorded the weakest performance with growth of just 0.1%.
Oil rises while gold extends losses
Brent crude increased 0.25% to $73.13 a barrel, while US West Texas Intermediate crude gained 0.14% to $69.60.
Gold prices continued to weaken, with gold futures falling 1.43% to $3,981.05 an ounce and spot gold declining 0.97% to $3,969.62.
UK corporate highlights
CMC Markets (LSE:CMCX) upgraded its FY2027 net operating income guidance after continued strong expansion in its B2B trading platform business.
Topps Tiles (LSE:TPT) warned that full-year profit is expected to come in only slightly above £6.5 million as softer consumer demand and recent heatwaves weighed on trading.
Greggs (LSE:GRG) announced that long-serving Chief Financial Officer Richard Hutton will retire at the end of 2026, with Ben Waldron appointed as his successor.
Associated British Foods (LSE:ABF) maintained its full-year guidance outside its Sugar division after Primark delivered 3% sales growth during the third quarter.
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