Early market roundup: European stocks follow US lower as oil jumps

Stock prices in Europe fell on Wednesday morning amid ongoing inflation worries as the Brent price topped the USD100 per barrel mark, before central bank decisions move further into the focus over the coming days.

The European Central Bank is expected to hike on Thursday, while a US inflation report on Friday could all but ensure the Federal Reserve does the same next week.

The FTSE 100 index opened down 21.37 points, 0.2%, at 10,790.29. The FTSE 250 fell 24.10 points, 0.1%, at 24,324.75, and the AIM all-share rose just 0.70 of a point, 0.1%, at 797.45.

The Cboe UK 100 was down 0.2% at 1,073.23, the Cboe UK 250 was down 0.1% at 21,095.36 but the Cboe small companies was up 0.2% at 18,717.08.

The CAC 40 in Paris lost 0.8%, while Frankfurt's DAX 40 fell 0.5%.

A barrel of Brent spiked to USD99.91, from USD98.00 late Tuesday afternoon, having topped USD100 shortly after the London equities open on Wednesday.

"The oil price is climbing further on Wednesday as Middle Eastern energy supplies have been actively targeted in the latest escalation of the conflict. USD100 is a psychological level that matters for markets. If the oil price rises above this level it will give many central banks no choice but to hike rates, it will increase costs for businesses and consumers and ultimately could weigh on economic growth," XTB analyst Kathleen Brooks commented.

The rise in the oil price put pressure on travel stocks, with British Airways parent IAG down 0.7%, while budget carrier Wizz Air fell 1.4%.

The pound rose to USD1.3560 on Wednesday, from USD1.3548 on Tuesday. Against the euro, it was up at EUR1.1646 from EUR1.1643. The euro bought USD1.1637, up from USD1.1631. Against the yen, the dollar fell to JPY153.35 from JPY154.18.

Quintex Intel analyst Stephen Innes commented: "The market has spent the past week moving the September Federal Reserve decision closer to a coin toss, and Friday’s CPI report now holds the casting vote."

Friday's reading is expected to show the pace of annual consumer price inflation cooled to 2.4% in August from 2.5% in July, according to consensus cited by FXStreet.

The yield on the US 10-year Treasury was steady at 4.80%, where it stood at the time of the London equities close on Tuesday. The yield on the US 30-year Treasury was unchanged at 5.25%.

In New York on Tuesday, the Dow Jones Industrial Average fell 1.2%, the S&P 500 lost 0.6% and the Nasdaq Composite fell 0.3%.

Before the US data, the ECB decides on rates on Thursday. A 25 basis point hike is expected.

At the Bank of England, meanwhile, there is no "secret plan" to unconditionally increase interest rates, the governor said Tuesday.

Adnrew Bailey told MPs at Parliament's Treasury Committee there are still "upside" risks to inflation, meaning it is more likely to overshoot forecasts than undershoot.

Bailey told the committee: "The risks are on the upside, the risk particularly being with energy prices.

"What I want to dispel is the idea that we have a secret plan and we know where we are going to go to."

In Tokyo on Wednesday, the Nikkei 225 ended down 0.2%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng Index in Hong Kong was 0.3% lower. In Sydney, the S&P/ASX 200 ended down 0.1%.

An ounce of gold fell to USD4,409.44 from USD4,494.00 late Tuesday afternoon.

In London, Victrex shares shot up 15%. It has lifted its annual guidance, as the polymer solutions provider says "strong momentum" has continued into its fourth quarter.

Victrex, which serves industries including the aerospace, medical and automotive sectors, is seeing "good growth across all regions". The firm's financial year runs to September 30.

"Since our Q3 trading update on 7 July 2026, strong momentum has continued into Q4, with year-on-year growth across our end markets driven by aerospace, value added resellers and electronics," Victrex said.

"The previously announced 10% reduction in our headcount has been completed, with the initial benefits being seen during Q4 and contributing to at least £10 million of annualised savings from our wider profit improvement plan expected to be delivered in FY 2027."

As a result, it now expects underlying pretax profit in the range of £45 million and £47 million, ahead of a prior forecast of £42 million to £44 million.

Gym Group climbed 5.2% as it expects annual profit at the top end of market forecasts, amid a more favourable outlook for costs.

The gym operator said pretax profit in the first half of 2026 rose 48% to £4.9 million from £3.3 million, while revenue climbed 10% to £133.1 million from £121.0 million.

Adjusted earnings before interest, tax, depreciation and amortisation grew 10% to £53.0 million from £48.3 million, and less normalised rent, it amounted to £30.8 million, up 12% from £27.4 million.

Gym Group said it is on track for 3% like-for-like revenue growth for the full year. Like-for-like cost growth is now expected to be at the lower end of a guided range of 3% to 4%.

As a result, it sees adjusted Ebitda less normalised rent at the top end of the current analysts' forecasts, which it puts at £60.5 million to £62.0 million. This would represent an improvement from £56.7 million in 2025.

A stock on the decline, meanwhile, was Burberry. The luxury fashion firm fell 2.4% after HSBC cut it to 'hold'.

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