London’s blue-chip index closed Wednesday up 0.3% at 10,255, recovering from a volatile session marked by sharp swings in both directions throughout the day.
Sentiment remained cautious amid renewed US-Iran tensions, though traders rotated out of miners and financials into defensives, property and consumer stocks to help the index recover.
Property developers Tritax Big Box, Land Sec and British Land led the risers, joined by bookmaker Entain, insurer Admiral and grocer Tesco among the top performers on the day.
Shell and BP provided significant upside support, with BAT, Unilever, GSK and Compass all finishing between 1% and 2% higher on the session.
HSBC weighed heavily on the index, falling 1.6%, while AstraZeneca, Glencore and other miners, along with Barclays and Lloyds, all closed in negative territory.
Market analyst Patrick Muinnelly at Tickmill described it as a “choppy Wednesday session,” saying the tone was “cautious rather than panicked” as Middle East risk remained firmly on traders’ desks.
US CPI rose to an annual rate of 4.2% in May from 3.8%, matching economist forecasts and marking the hottest headline reading since April 2023, with core CPI edging up to 2.9% from 2.8%.
Barclays economist Pooja Sriram said the in-line print “provides little reason to alter views on inflation” and that the data would “likely keep the FOMC on the sidelines,” maintaining a call for rates to remain unchanged through the rest of the year before a 25 basis point cut in March 2027.
Chris Zaccarelli, chief investment officer for Northlight Asset Management, warned that with CPI at 4.2%, the Fed “will be in no position to cut rates if this continues,” adding that “the Fed’s next move may need to be a hike.”
Joe Mazzola, market analyst at Charles Schwab, noted that “Treasury yields retreated and stocks pared earlier losses in the immediate aftermath of the report, but the market remained red as Middle East tension mounted.”
WH Smith tumbled 15.2% in early trading after issuing a profit warning and launching a cash call, with the group now guiding for headline pre-tax profit of £75 million to £90 million for the 2026 financial year, down from previous guidance of £90 million to £105 million.
Analyst Jonathan Pritchard at Peel Hunt removed his add rating, noting that US travel retail like-for-like sales had shifted from plus 6% to minus 1% over the last seven weeks, with heavy promotional activity squeezing profit margins across the division.
EnQuest shares surged 20% after the company agreed a proposed $833 million acquisition of offshore Malaysian oil and gas interests that would more than double group production through four production sharing contracts with Petronas.
Shore Capital analyst James Hosie said the transaction is expected to be “immediately free cash flow accretive on completion,” with EnQuest set to become a producer of more than 100,000 barrels of oil equivalent per day.
Fuller Smith and Turner shares rose 9.5% after the London pubs group posted adjusted pre-tax profit of £34.6 million for the year to 28 March, up 28% year-on-year and ahead of the consensus forecast of £32.5 million.
Deutsche Bank market strategist Jim Reid said markets are “straddling some fairly extreme scenarios,” oscillating between deal or no deal with the US and Iran and “swinging between 1999-style AI exuberance and 2000-type tech crash fears.”
