- FTSE 100 down 41 points to 10,332
- UK services sector PMI improved last month
- OECD growth forecast cut to 2.8%, or 2.1% if Iran war lasts
5.30pm: In the red
It was a losing day for London stocks, with the FTSE 100 down 41 points at 10,332 as continued tensions in the Middle East boosted oil prices, which rose about 2%.
“Oil prices continue to make headway after the overnight strikes on Kuwait, and once more it is hitting most markets save for technology. We are no longer watching a delicate ceasefire, instead what is occurring is more akin to a low-intensity conflict,” IG chief market analyst Chris Beauchamp said.
“As noted before, this simply leaves the vital issue of oil supplies unresolved, and the clock continues to tick down towards doomsday for oil inventories and the global economy.”
4.11pm: FTSE down, others down more
The FTSE is still outperforming, but the broader falling tide is dragging most boats lower, with the DAX down 1.2% and the Dow down 0.8%.
Rising bond yields could be the key, with oil prices down slightly from earlier highs, though Brent is still only just over $2 short of $100 a barrel.
Miners, banks, defence companies and all sorts are among the biggest fallers, with ICG and Burberry the worst affected.
ICG has been hit by Swiss investment firm Partners Group capping withdrawals from a massive private equity fund.
This has prompted falls in fund groups on both sides of the pond and stirred "broader market jitters over private credit exposures", as Reuters puts it. Bridgepoint shares were down 9% on the FTSE 250.
3.20pm: UK consumer confidence improves
UK consumer confidence last month saw the largest monthly gain in sentiment since in five years, according to YouGov and the Centre for Economics and Business Research (Cebr).
An easing in negative perceptions surrounding household finances was key as the index rose to 104.9 in May from 102.4 in April.
The index of current household finances jumped to 82.5 from 76.0, while confidence index about household finances over the coming 12 months rose to 82.7 from 77, though numbers below 100 points represent a negative reading (as the 50-mark does in the PMI index).
Perceptions of business activity and job security declined, though remained in positive territory, while outlooks for both measures over improved.
"May's increase in the Index is a welcome sign following two consecutive months of relatively stark falls," said Cebr managing economist Pushpin Singh.
"Notably, the improvement in perceptions of household finances comes amidst a lower-than-expected inflation reading for April, though the fact that both household finances measures remain in negative territory continues to underscore the underlying headwinds affecting the UK economy."
2.55pm: Wall Street opens in red
Stocks have opened lower across the Atlantic, with tech stocks at the heart of the decline.
The Nasdaq slipped 0.7% and the Dow Jones has dropped 0.6%, while the S&P is 0.5% lower. Smaller companies were hit too, with the Russell 2000 down 0.8%.
Among the biggest fallers on the Nasdaq 100 were Atlassian, Datadog, Palo Alto Networks, Zscaler, Palantir and Arm Holdings, suggesting investors were taking money off the table in some of the market's higher-rated growth names.
This weakness extended to the Dow, where IBM, Salesforce, Nvidia and Microsoft were among the biggest drags, alongside Goldman Sachs and Boeing.
Declines are bigger than the FTSE, which is proving one of the strong global indices today, down only around 0.1-0.2%, helped by gains for defensive names.
1.37pm: UK stock market an 'incomplete plate'
UBS has struck a cautious note on UK equities, arguing the market is "an incomplete plate rather than an empty one" (whatever that means) and that stock-picking is likely to outperform broad exposure.
The Swiss bank says earnings remain supportive, helped by improving forecasts and a stronger contribution from energy companies, but warned that sentiment remains fragile and market gains are being driven by a narrow group of stocks.
While valuations are still attractive, UBS views them as a buffer rather than a catalyst. It favours cash-generative companies with strong dividends and buybacks, while flagging crowded positions in consumer discretionary, healthcare and industrial stocks as potential risks.
Top picks include GSK and Renishaw, while the lowest-ranked include Diageo.
12.42pm: US futures mixed
The FTSE's losses have fluctuated this morning but have not made significant moves either way.
It's a similar story across most major European markets as investors remain broadly cautious about risk today.
Germany's DAX fell 0.8%, the CAC 40 in Paris lost 0.3% and the Euro Stoxx 50 is down 0.5%, with Spain's IBEX 35 bucking the trend with a 0.3% gain.
Oil prices are up 2%, with Brent topping $98 and WTI crude just shy of $96 a barrel.
Sentiment is also mixed on Wall Street, where Dow Jones futures are pointing 0.2% lower and S&P 500 futures are pancake flat, but those for the Nasdaq are up 0.2%.
There was news about SpaceX this morning, as we learned that Elon Musk and his advisors are reportedly looking to price just over 555 million the listing at $135 per share, eschewing the normal practice of offering a price range.
This means the IPO would raise a staggering $75 billion and value the rockets and satellites group at roughly $1.75 trillion.
11.38am: Google faces AI curbs on search results
Earlier this morning, the Competition and Markets Authority moved to curb Google's growing use of AI in search results, saying publishers must be given greater control over how their content is used.
Under new measures announced by the CMA, website owners and news publishers will be able to opt out of Google's AI-generated search summaries while still appearing in traditional search results.
Google will also be required to provide clearer attribution and links to original sources, and allow publishers to block the use of their content for training and fine-tuning AI models.
CMA boss Sarah Cardell said: "With features like AI Overviews rapidly reshaping online search, it is crucial that content publishers, including news organisations, have appropriate bargaining power over how their content is used.
"At the same time, these measures will help tens of millions of UK search users better understand and trust the information presented to them."
With Google recently announcing changes to its search business, she said the requirements introduced today "are designed to respond to what Google is doing now and in the future".
Further action in relation to Google’s search business will be announced in the coming weeks, Cardell added.
10.54am: Shore Cap uncertain on B&M
B&M European Value shares may have surged 15% but Shore Capital has placed the discount retailer under review and cautioned that the conditions for a meaningful re-rating are not yet in place.
This is down to some uncertainty about the UK outlook, wth a slower start to seasonal gardening sales against a strong period last year, with things picking up in May,
"The question is where does B&M go from here in terms of returning to LFL growth and repairing margins," says analyst David Hughes, "with no guidance yet given for FY27F it seems the outlook remains uncertain."
Adding that the valuation is "clearly attractive", he concludes: "We previously spoke to the low valuation of B&M being reflective of the uncertainty that the market has around the trajectory of the business.
"With a cautious tone on the outlook for FY27F and no figures yet attached to the new primary metric of adjusted PBT it does not look to us like this uncertainty is going to improve in the short term."
10.21am: What does the PMI mean for the BoE?
The services PMI data this week shows how the war in Iran is beginning to feed through to underlying economic activity, says economist Rob Wood at Pantheon Macroeconomics.
"An upward revision to the Final PMI shows that businesses responding later to the survey were far more bullish than the first wave of responses, after political uncertainty dragged on sentiment in the first few weeks of May."
The revision implies that firms sampled between the flash and final release reported a services PMI of 54.0, "which if replicated in the full sample in June, would be the strongest since January", he says.
"That said, submissions to the PMI likely exaggerate swings in activity in both directions, and the final PMI for May in isolation is still consistent with GDP remaining unchanged in Q2".
Wood still thinks Bank of England will raise rates in July, as oil prices are close to hitting $100 a barrel again.
"But we think there is little appetite for a resumption of intense fighting in the Middle East, and any news of a breakthrough on further peace talks will mean a fall in energy prices, so the risks are towards the MPC keeping rates on hold this year."
9.48am: Services PMI survey confirms inflationary pressures
UK services sector activity fell into contraction territory in May for the first time since April last year, but was not quite as bad as expected.
The services PMI rose to 49.3 from 52.7 in April, but ahead of the mid-month 'flash' reading of 47.9.
The improvement lifted the composite PMI, which combines with the resilient manufacturing activity reported on Monday, to 49.7 from 48.5, above the 48.5 preliminary reading.
"UK service sector companies signalled a reversal of fortunes in May as business activity fell into contraction after showing some resilience earlier this spring," says Tim Moore, economics director at S&P Global.
"Subdued business and consumer demand, across both domestic and overseas markets, was cited as holding back performance.
"Many service sector companies noted that the Middle East conflict had an adverse impact on sales pipelines and general business prospects."
Hospitality and transportation companies commented on squeezed discretionary spending and pressure from sharply rising input costs, while professional services firms reported a setback from rising risk aversion among clients, he says.
Business investment spending on technology services remained a bright spot for parts of the service economy.
Rapidly accelerating input costs were the major challenge, driven by higher fuel prices and transportation bills, though the overall rate of input price inflation eased slightly from the four-year highs of April.
"Worries about a prolonged spike in inflationary pressures, combined with elevated geopolitical tensions and subdued demand, continued to weigh on business activity expectations in May. The degree of optimism eased for the third time in four months, to its lowest since the US tariffs-related slump in April 2025."
9.25am: FTSE starts to fall
The FTSE 100 has deviated from its early immobilisation, falling 37 points to 10,337 under the weight of falls from the mining, defence, utilities and several other sectors.
ICG is leading the decline, down 5.4% but the reason is not immediately clear. Fresnillo, BAT, Rio Tinto, Melrose and Burberry are next, all down over 2%.
"Stock indices in Europe are buckling under the news that fresh Iranian strikes have hit parts of the Gulf," says Kathleen Brooks at XTB, as diplomatic efforts to end the war "look like they are on pause".
Last night, President Trump dismissed recent reports that the US and Iran had stopped ceasefire talks, saying these "fake news reports that the Islamic Republic of Iran, and the USA stopped speaking a few days ago are false and erroneous".
He says conversations "have been going on continuously, including four days ago, three days ago, two days ago, one day ago, and today. Where they lead, one never knows, but as I told Iran, ‘It’s time, one way or another, for you to make a deal. You’ve been doing this for 47 years, and it cannot be allowed to go on any longer!'"
Markets are choosing scepticism, with Brent crude oil up 2% back above $97 per barrel.
"As we enter the start of the fourth month of the conflict, there are clear signs that the energy price spike is becoming embedded in the global economy," says Brooks, with PMI surveys suggestiong that elevated levels of inflation are passing through the manufacturing sector.
Elsewhere, the OECD has also cut its growth outlook for this year, expecting global growth to slow to 2.8%, down from 3.4% last year.
It warned that a closure of the Strait of Hormuz that lasts beyond this month and into 2027, could trigger a much worse outcome for the global economy, with growth of 2.1% this year and a mere 1.8% next year.
8.50am: Marechale soars, BSF tumbles
Among smaller-cap movers, corporate finance boutique Marechale Capital has leapt over 30% after announcing a trio of acquisitions designed to transform it into a fully integrated digital merchant bank.
The company is acquiring Stanford Capital Partners, a UK SME-focused corporate finance and broking firm; Blubird Global, an institutional-grade asset tokenisation platform with more than $32 billion of assets on its registry; and NJC Capital, a systematic alternative investment fund and its manager.
The deals will be settled via share-for-share exchanges involving the issue of 75.2 million new shares at 1.75p apiece, and are conditional on shareholder approval at a general meeting scheduled for 22 June.
At the other end of the scale, BSF Enterprise, the developer of lab-grown leather and cultivated meat, has dropped 31% after announcing a placing of 25 million new shares at 2p apiece to raise £500,000.
The proceeds are to be used "to reinforce the company's strategic business and growth plans, with the possibility of significant growth in shareholder value throughout 2026".
Bowsprit Partners, who organised the placing, will receive 1.5 million warrants exercisable at 2p per share within three years of admission as a fee.
8.36am: Boohoo all smiles
Boohoo/Debenhams shares are up 10.3% after its Q1 trading update.
"Debenhams group is back in growth," says analyst Wayne Brown at Panmure Liberum. "The trajectory has been evident for some time now but it’s a major inflection point."
He says the turnaround plan to simplify the operations, cut major costs, integrate all the brands into one ecosystem and then reinvigorate the brands "seems to be coming together".
Looking through the different website brands, Brown says Debenhams grew at a double-digit percentage, PLT returned to growth and womenswear in general was "looking a very different (positive) picture".
Brown concludes: "The proof points of the plan are real, but a FCF yield of circa 12% reflects the shares are not reflecting the turnaround in its price."
8.24am: B&M beat
B&M prelims looked bad to the naked eye, with profits tumbling, but EBITDA actually beat City analyst expectations, sending the shares up 15%.
The outcome of £457 million was above the middle of the consensus range of £440-475 million, where the average was £451 million, says Peel Hunt analyst Jonathan Pritchard.
He says B&M's profit beat was "helped by flat LFL sales in the core business" in the fourth quarter, which "is a pleasing outcome and suggests management is getting to grips with the problems".
The current trading statement is "vague but points to positive LFL sales in France and Heron, which is pleasing", after rhetoric on the UK arm suggests that April and early May were tough, before improving weather supported a better recent trend.
"Net, we expect UK LFL sales to be slightly negative in 1Q. With the higher base, there is upside risk to our forecasts, but we will wait to speak to the company for further guidance."
8.15am: FTSE flat, bonds exert pressure
The FTSE 100 has started flat, down one point now up just over two at 10,376.
Gains among utilities, retailers and housebuilders has been offset weakness in miners, banks and economically sensitive industrials.
Utilities were among the strongest performers, with United Utilities, SSE, National Grid and Centrica all higher, while retailers and other consumer-facing stocks including Tesco, Sainsbury's, Whitbread and Howden Joinery, as well as housebuilders Barratt Redrow and Berkeley gained ground too.
Those gains are balanced by losses among heavyweight mining stocks, with Fresnillo, Rio Tinto and Antofagasta all lower, weighing on the index alongside declines in Rolls-Royce, Melrose Industries and Babcock International.
Banks are also under pressure, with Barclays, HSBC, NatWest, St James's Place and Lion Finance Group among the fallers.
UK and other major global bonds are exerting some pressure, with yields rising roughly in line with oil prices over the past 24 hours.
8am: Currys makes former shop assistant CEO
Currys has promoted Fredrik Tønnesen, a former sales assistant and currently head of its Nordic business, to succeed Alex Baldock as group chief executive as the electricals retailer looks to build on a recent recovery in trading and profits.
Tønnesen, 44, will take over on 3 August after rising through a series of senior management roles over more than two decades with the company.
He currently runs Currys' Nordic operations, which account for about 40% of group revenue and has tripled operating profits during his tenure.
7.53am: B&M doing less well than Boohoo with turnaround
B&M European Value Retail has reported a 38% fall in annual profits, coming from weak trading in the UK being exacerbated by what it admits are "execution issues".
However, chief executive Tjeerd Jegen said the turnaround programme is beginning to show signs of progress.
The FTSE 250-listed discount retailer posted adjusted profit before tax of £284 million for the 2026 financial year, down from £455 million a year earlier, while adjusted EBITDA fell 26% to £459 million.
Elsewhere, and more positively, Boohoo Group, the online retailer trading as Debenhams Group if Mike Ashley would only let it change its name, said it returned to growth in the first quarter.
Its turnaround programme is gathering more momentum, with "materially" stronger profitability and cash generation supporting confidence in its outlook.
Boss Dan Finley said the quarter "marks the inflection point we have been working towards".
7.27am: US rates expecations and Bitcoin signals
Wall Street stocks took it in their stride last night as US rate hike expectations grew, says market analyst Kyle Rodda at Capital.com.
The spark was US jobs openings data that were better than expected, providing more evidence of labour market resilience, which "is leading the markets to price in, once again, a modestly better than even chance that the US Federal Reserve will lift rates before the end of the year".
This is because increases in oil prices are leading worries of sticky inflation due to an apparent lack of progress in talks between the US and Iran.
"Broader markets have so far taken the move in crude in stride. However, if allowed to continue, it will quite likely cause fresh volatility eventually."
Rodda adds: "The lift in rate hike expectations – and perhaps more crucially, policy uncertainty – is contributing to a significant drop in Bitcoin.
Bitcoin fell by almost 7% yesterday and is down 11.5% over the week to $67,058.
"The deeper story here is likely about policy expectations. It raises the question of whether Bitcoin’s sell-off is a warning sign for other risk assets, as it has been in the past."
7.18am: FTSE 100 to open in red as oil climbs again
The FTSE 100 and other European markets are expected to open in the red on Wednesday as markets continue to grapple with the twin factors of Iran uncertainty and AI excitement.
On the futures market, the London index has been called 15 points lower, reverting to the negative trend broken by yesterday's gain of almost 35 points to close at 10,373.51.
In New York overnight, stocks generally finished higher, with the Dow Jones climbing 0.5%, while the S&P 500 inched up 0.1% and the Nasdaq ended just seven points above flat.
Oil prices also climbed overnight and have continued to gain this morning, with Brent crude back up 1.6% to $97.52 a barrel.
In the Middle East, new strikes from US and Iran forces are testing optimism that an agreement to open the Strait of Hormuz could come soon.
US forces carried out strikes against Qeshm Island while Iran retaliated against Kuwait and Bahrain, while in the world of diplomacy Iranian sources said "the final text from Iran is still under discussion in Tehran and no response has been sent yet".
US Secretary of State Marco Rubio said that a deal "could happen today, it could happen tomorrow, it could happen next week”.
In UK company news, results are out from B&M European Value Retail, Boohoo, Ninety One, Ramsdens, discoverIE, while in macroeconomics the services PMI data is due later this morning.
