LONDON MARKET OPEN: Stocks fade as oil sticks above USD110

Wed, 20th May 2026 08:52

(Alliance News) - European equities traded largely lower on Wednesday, as geopolitical concerns linger, while sterling was steady after a softer-than-expected UK consumer price inflation reading.

The FTSE 100 index traded down 28.12 points, 0.3%, at 10,302.43. The FTSE 250 was down 22.60 points, 0.1%, at 22,545.37, and the AIM all-share edged down 3.93 points, 0.5%, at 789.69.

The Cboe UK 100 was down 0.2% at 1,025.11, the Cboe UK 250 was also down 0.2%, trading at 19,495.72, and the Cboe small companies edged up 0.1% at 18,486.45.

In Paris, the CAC 40 was up 0.1%, while the DAX 40 in Frankfurt fell 0.2%.

The yield on the US 10-year Treasury narrowed to 4.65% on Wednesday morning, from 4.68% at the time of the London equities close on Tuesday. The 30-year yield was at 5.17%, abating slightly from 5.18%.

A barrel of Brent was largely lower at USD110.18, from USD110.72. Gold ebbed to USD4,482.30 an ounce from USD4,502.96.

"This morning the government announced that it was lifting sanctions on Russian oil that is refined in different countries. This means that the UK can now import jet fuel from India that originates from Russia, and restrictions on LNG supplies from Russia have also been eased. This is a spectacular U-turn from the government, especially after the G7 group of nations, including the UK, had agreed to a wave of new sanctions on Russia earlier on Tuesday," XTB analyst Kathleen Brooks commented.

"The market impact from this news has been minimal. Brent crude remains above USD110 per barrel, even though the oil price has been falling in the last 24 hours. This suggests that we could remain above this key level until the Strait of Hormuz is fully reopen."

In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.7% and the Nasdaq Composite down 0.8%.

Sterling was largely unmoved at USD1.3394 on Wednesday from USD1.3396 at the time of the London equities close on Tuesday. Against the euro, it declined to EUR1.1545 from EUR1.1549.

The euro was steady at USD1.1598. Against the yen, the dollar fell to JPY158.96 from JPY159.14.

Wednesday's global economic calendar has eurozone inflation data at 1000 BST before minutes of the April Federal Open Market Committee meeting at 1900.

Already out, UK consumer price inflation was cooler than expected last month, data on Wednesday showed, despite a "large increase in motor fuel prices".

The Office for National Statistics said consumer prices rose 2.8% in April, cooling from a 3.3% surge in March. A loftier rate of 3.0% had been expected for April, according to consensus cited by FXStreet.

The Bank of England has a 2% inflation target.

Consumer prices rose 0.7% in April from March, below expectations of a 0.9% rise.

"Housing and household services made the largest downward contribution to the monthly change," the ONS said. "An upward contribution from a large increase in motor fuel prices was counteracted by downward effects from other categories in the transport division."

Excluding food, energy, alcohol and tobacco, the annual core consumer price inflation rate cooled to 2.5% in April from 3.1% in March, below consensus of 2.6%.

Annual service price inflation eased markedly to 3.2% in April from 4.5% in March.

Schroders senior economist George Brown commented: "Inflation took a step back in April, but is set to leap at the end of spring. Higher energy prices look likely to lift inflation above 4% this year, having previously been on course to fall to around the 2% target this summer. What matters now is whether this starts to bleed into broader price and wage setting. A softening labour market and fragile growth should limit that risk, but the Bank of England can ill afford to be complacent after years of successive global supply shocks.

"This should keep the bank sounding hawkish, but we think it will ultimately stop short of hiking rates."

In Tokyo on Wednesday, the Nikkei 225 fell 1.2%. The Shanghai Composite was down 0.2%, while the Hang Seng Index fell 0.5%. In Sydney, the S&P/ASX 200 fell 1.3%.

In London, grocers were on the decline, with Tesco down 1.6% and Sainsbury's falling 0.9%, after reports the Treasury asked supermarkets to limit food prices in return for the lifting of some regulations.

The proposals would see shops voluntarily cap the prices of essential groceries such as eggs, bread and milk, according to the Financial Times. The Treasury has said it would in return offer supermarkets "incentives" which may include easing packaging policies and delay potentially costly changes to healthy food rules, the newspaper said.

However, a minister has said the government is not urging supermarkets to voluntarily cap the prices of essential groceries.

Treasury minister Dan Tomlinson said "this isn't something we're looking at" when asked if there had been conversations with supermarkets about bringing in price caps.

Marks & Spencer added 2.0%. It recorded a rise in annual revenue, but profit declined on rising costs and a GBP131 million hit from a cyber attack.

The clothing, homewares and food retailer said pretax profit in the year to March 28 declined 29% to GBP364.6 million from GBP511.8 million.

"Profitability was impacted by the incident in the first half but showed good progress in the second half," M&S explained.

In addition, it said operating costs increased amid rising employee pay, national insurance contributions and new store openings.

But revenue was on the up, surging 25% to GBP17.27 billion from GBP13.82 billion.

Looking ahead, Chief Executive Stuart Machin warns of a "triple whammy" to the retail sector, amid rising tax, a "greater regulatory burden" and global conflict.

Experian was the worst large-cap performer, down 4.4%. The provider of consumer credit score checking, fraud detection and credit application processing said pretax profit in the year to March 31 increased 26% to USD1.95 billion from USD1.55 billion, with revenue up 12% to USD8.45 billion from USD7.52 billion.

Revenue was in line with consensus. Benchmark earnings per share rose 15% to 179.8 cents, beating consensus of 179.2 cents. Experian lifted its total dividend to 69.25 cents per share from 62.50, but below consensus of 70.0 cents.

Looking ahead, it expects total revenue growth between 8% and 11%, which would imply a range of GBP9.12 billion to GBP9.37 billion. Consensus for financial 2027 stands at GBP9.16 billion.

RS Group added 9.7%, as it announced a GBP100 million buyback and reported annual profit increased, despite "challenging markets".

The industrial and electronics products distributor said pretax profit in the year to March 31 was up 6.8% to GBP220 million from GBP206 million, with revenue edging down 0.8% to GBP2.88 billion from GBP2.90 billion.

Impax Asset Management fell 3.6% as it reported weaker assets under management on stubborn outflows in its listed equities segment. Assets under management at the March 31 half-year end stood at GBP22.31 billion, declining from GBP26.06 billion at the end of September. It reported a net outflow of GBP3.64 billion, including GBP3.53 billion from the listed equities offering alone.

Impax added: "Since January 2026, after an unusually difficult three-year period for many investment managers like Impax that focus on actively managed thematic strategies, markets have been considerably more favourable. 70% of our AUM has outperformed generic indices since the beginning of the calendar year, notwithstanding the market turbulence in March following the start of the conflict in Iran.

"However, as many asset owners base their investment decisions on historical numbers over at least one year, we continued to see relatively high net outflows during the period, at GBP3.6 billion, which were driven principally by redemptions from institutional investors. Our wholesale channel continues to see a gradually improving trajectory, albeit also currently in net outflows. Against this backdrop we are working hard to slow net outflows, are refining our existing strategy and have taken steps to further improve our operating efficiency and reduce complexity within the business."

Half-year pretax profit fell 56% on-year to GBP8.2 million from GBP18.6 million. Revenue weakened 23% to GBP58.8 million from GBP76.5 million.

By Eric Cunha, Alliance News news editor

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