British equities closed lower on Tuesday, with the FTSE (^FTSE) dropping 0.10% as oil prices climbed amid escalating hostilities between the United States and Iran.
The conflict intensified after the US and Iran exchanged retaliatory strikes over the weekend, with fresh damage reported to energy infrastructure in Saudi Arabia’s southern region on Tuesday.
Saudi Arabia’s Ministry of Energy confirmed that several energy facilities in the country’s southern region were struck by attacks, compounding fears over global oil supply disruptions.
Oxford Economics offered a measured assessment of the Strait of Hormuz situation, noting that a prolonged full closure remains unlikely to serve either party’s long-term interests.
“While the Strait of Hormuz remains effectively shut to shipping, a prolonged full closure isn’t in the interests of either the US or Iran,” Oxford Economics said.
The firm added that informal arrangements over coming months are expected to allow more ships through the Strait, even if the underlying conflict continues.
On the domestic front, British retail sales growth slowed sharply, with annual like-for-like sales rising just 0.5% in August 2026, down from 1% the previous month, according to British Retail Consortium data.
The August reading missed analyst expectations of a 1.2% gain and marked the weakest growth since October 2024, signalling persistent pressure on UK household budgets.
Harvir Dhillon, lead economist at the BRC, described the month as broadly underwhelming despite isolated bright spots in certain food categories.
“August was a disappointing month for retail sales. Despite pockets of growth, particularly in some food categories, overall performance was below the average for the past year,” Dhillon said.
He added that rising household bills were clearly prompting consumers to cut back, stating that “many shoppers have clearly been tightening their belts” as energy costs remain elevated.
Computacenter (CCC.L) was the worst performer on the blue-chip index, with shares falling 8.39% despite the technology and services company reporting higher attributable profit and revenue for the first half of 2026.
The company upgraded its adjusted pretax profit guidance for 2026 to “significantly” ahead of analyst expectations of 340.9 million pounds, compared to previous guidance of being “comfortably” ahead of market estimates.
Dunelm Group (DNLM.L) suffered an even steeper decline, tumbling 13.82% after reporting that profit attributable to equity holders fell slightly year over year to 155.5 million pounds for the 52 weeks ended June 27, from 156.3 million pounds.
The home furnishings retailer also unveiled a plan to strip out 100 million pounds of unproductive costs from its fiscal 2026 base through fiscal 2029 as part of a broader three-year strategic growth plan.
RBC Capital Markets noted that while Dunelm’s full-year pretax profit came in slightly ahead of consensus, the retailer flagged a tough start to fiscal 2027, citing recent hot weather as a headwind.
“Dunelm is now looking to prioritise growth more, and as such it is also guiding to higher capex over the next three years,” RBC Capital Markets said in its assessment of the strategic update.
