Early market roundup: Shares down as oil up; Middle East tension high

Stock prices in London opened lower on Tuesday as oil prices rose amid heightened tensions in the Middle East, while yields on US treasuries increased.

The FTSE 100 index opened down 43.20 points, 0.4%, at 10,781.06. The FTSE 250 was down 230.98 points, 0.9%, at 24,707.81, and the AIM all-share was down 8.81 points, 1.1%, at 802.37.

The Cboe UK 100 was down 0.2% at 1,072.00, the Cboe UK 250 was down 0.9% at 21,492.16, and the Cboe small companies was down 0.4% at 18,996.21.

In European equities on Tuesday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was down 0.5%.

The pound was quoted at USD1.3535 early Tuesday, lower than USD1.3548 late Monday. Against the euro, sterling rose to EUR1.1674 from EUR1.1662.

The euro traded at USD1.1595 early Tuesday, lower than USD1.1617 late Monday. Against the yen, the dollar was quoted at JPY160.00 versus JPY159.75.

In the UK, house price growth remained subdued in August amid economic uncertainty and elevated geopolitical tensions, according to Nationwide Building Society.

House prices rose 1.6% annually in August, picking up slightly from growth of 1.4% in July, which was revised down from 1.8%. The August reading fell short of the FXStreet-cited consensus of 2.0%.

On a seasonally adjusted monthly basis, prices increased 0.2% in August following a 0.1% decline in July, revised down from a previously reported 0.1% rise. The latest monthly increase topped expectations of 0.1%.

The average UK house price stood at £275,465 in August on a non-seasonally adjusted basis, down from £276,581 in July.

Geopolitical tensions remained in focus after US President Donald Trump threatened to hit Iran "hard" following the first exchange of fire between the two countries in more than a month.

Iranian President Masoud Pezeshkian, however, said further fighting with the US was not in his country's interest and indicated Tehran was prepared to return to a June agreement aimed at ending the conflict.

Speaking at the Shanghai Cooperation Organisation summit in Kyrgyzstan, Pezeshkian said Tehran would "immediately" take reciprocal action if Washington returned to its commitments under the memorandum of understanding. Iran, he said, was prepared to honour the agreement if the US did the same.

Meanwhile, three "unknown projectiles" struck a tanker in the Strait of Hormuz overnight, according to the UK Maritime Trade Operations, following the fresh flare-up in the US-Iran war.

"A tanker has reported being struck by 3 unknown projectiles whilst completing an outbound transit of the Strait of Hormuz," UKMTO said early Tuesday. The incident occurred around 17 nautical miles, or 31 kilometres, east of Khasab in Oman.

Brent oil was trading at USD91.76 a barrel early Tuesday, higher than USD90.33 late Monday.

In London, Reckitt Benckiser jumped 5.0% to the top of the FTSE 100 after JPMorgan upgraded the consumer goods company to 'overweight' from 'neutral' and raised its price target to 6,500p from 5,800p.

Oil majors BP and Shell rose 3.4% and 1.9%, respectively, supported by higher oil prices amid renewed tensions between the US and Iran.

Bunzl gained 1.8% after reporting higher first-half earnings, upgrading its 2026 outlook and announcing a new £500 million share buyback programme.

Revenue rose 3.0% to £5.93 billion in the six months to June 30 from £5.76 billion a year earlier, while statutory pretax profit climbed 16% to £290.4 million from £250.1 million.

Adjusted earnings per share increased 13% to 87.7p from 77.8p.

The distribution and outsourcing company lifted its interim dividend by 3.0% to 20.8p from 20.2p.

Bunzl also announced a £500 million share buyback to be completed over the next 12 months, with the first £250 million tranche beginning immediately.

On the FTSE 250, Bodycote rose 4.3% to the top of the index after accepting a £1.65 billion cash takeover offer from Veritas Capital Fund Management.

Shareholders will receive 940p per share, including Bodycote's 7.2p interim dividend. The offer values the heat treatment specialist at around £1.65 billion on a fully diluted equity basis and gives it an enterprise value of about £1.85 billion.

The offer represents a 37.5% premium to Bodycote's three-month volume-weighted average share price before takeover speculation emerged in May.

Bodycote's board unanimously recommended the deal, saying it offers shareholders immediate and certain cash value amid macroeconomic and end-market risks. Completion is expected in the first quarter of 2027, subject to shareholder, court and regulatory approvals.

Gamma Communications also gained, up 1.2%, after accepting a £1.02 billion cash takeover offer from private equity firm Epiris.

Shareholders will receive 1,120p per share, valuing Gamma at about £1.02 billion on a fully diluted equity basis and implying an enterprise value of around £1.08 billion.

The price represents a 53% premium to Gamma's 732p closing share price on April 7, before the offer period began.

Gamma's directors intend to recommend the deal unanimously, saying it provides shareholders with attractive and certain value in cash. The acquisition is expected to become effective in the first half of 2027, subject to shareholder, court, antitrust and regulatory approvals.

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 0.2%. In China, the Shanghai Composite ended down 0.2%, while the Hang Seng index in Hong Kong closed 0.9% lower. The S&P/ASX 200 in Sydney closed down 0.1%.

In the US on Monday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.1%.

The yield on the US 10-year Treasury was quoted at 4.78%, widening from 4.68%. The yield on the US 30-year Treasury was quoted at 5.27%, widening from 5.18%.

Gold was quoted at USD4,410.81 an ounce early Tuesday, down from USD4,427.90 on Monday.

Back in the UK, Prime Minister Andy Burnham is expected to call for greater public control over water, energy and transport in his first appearance in the House of Commons since becoming prime minister.

Burnham will use his Commons debut as prime minister on Tuesday, his first appearance at the despatch box in 16 years, to argue that stronger public control over essential services can be an engine for economic growth.

The prime minister is expected to argue that essential services have not been run in the public interest and have become neither reliable nor affordable, holding back households and the wider economy.

The Guardian reported that Burnham will make greater public control over key services a priority for the government in the coming months.

A No 10 source said: "Andy is optimistic about our country's future. He has a clear plan for how we turn things round. He is determined we make this the moment we bring back hope."

Still to come on Tuesday's economic calendar, manufacturing PMI readings are due from Germany, the eurozone, the UK and the US. The eurozone also releases inflation and unemployment data.

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