Early market roundup: Shares down as oil surges past USD110

London stocks opened lower on Tuesday as oil prices climbed above USD110 a barrel amid tensions in the Middle East, while lingering unrest in France kept European markets under pressure.

Sterling, meanwhile, rose after the UK jobless rate saw a surprise decline.

In London, the FTSE 100 index fell 24.01 points, 0.2%, at 10,740.68. The FTSE 250 fell 80.52 points, 0.3%, to 24,297.97, and the AIM all-share fell 3.10 points, 0.4%, to 765.40.

The Cboe UK 100 traded down 0.2% at 1,065.84, the Cboe UK 250 was 0.5% lower at 21,375.04, while the Cboe small companies was flat at 19,008.88.

In European equity markets on Tuesday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt retreated 0.6%.

Sterling rose to USD1.3351 on Tuesday morning, from USD1.3316 at the time of the London equities close on Monday. Versus the euro, it climbed to EUR1.1883 from EUR1.1869, but did hit its best level since early-June 2025 on Monday.

The UK unemployment rate surprisingly declined in the three months to August, data on Tuesday showed.

The Office for National Statistics said the jobless rate fell to 4.7% in the three month period to August from 4.9% in the three month stretch to July. It had been expected to remain at 4.9%, according to market consensus cited by FXStreet.

According to the ONS, payrolled employees in the UK fell by 111,000 on-year in August but edged up by 1,000 on-month.

An early estimate for September showed payrolled employees were down by 66,000 annually, but up 13,000 on-month.

Over the three-month period, average total earnings growth was 3.7%, cooling from 3.9% in the three months to July, and below the consensus cited by FXStreet of 3.8%.

Excluding bonuses, earnings growth picked up to 3.7% in the three months to August from 3.6% in the period to July. Consensus had this wage inflation measure staying at 3.6%, according to FXStreet.

Looking at the private sector alone, a figure closely tracked by the Bank of England, total pay growth was 3.1% in the three-month period, easing from 3.3%. When stripping out bonuses, however, it accelerated to 3.0% from 2.9%.

On Wednesday, there is a consumer price index report published at 0700 BST. According to consensus cited by FXStreet, the pace of consumer price inflation is expected to have quickened to 3.4% in September from 3.1% in August.

Analysts at ING commented: "After a torrid couple of years for UK employment, there are growing signs that the worst is behind us and that hiring is starting to stabilise. But that is not the same thing as a jobs market that is heating up. Wage growth is cool and there's scant evidence of second-round effects from the energy shock so far."

ING analysts noted a "jobs market that is stabilising is not the same as a jobs market that's heating up", with wage growth in the private sector, when adjusting for some effects, still consistent with the Bank of England's 2% inflation target.

"So when the Bank of England hikes rates in November, as looks increasingly likely, it won't be because of anything in the economic data. We still have inflation data tomorrow, but so far, there's scant evidence that the energy shock is broadening out via second-round effects. Instead, a November hike – together with the follow-up move we tentatively expect in February – will be entirely an insurance move. That means that, assuming we don't get big second-round effects emerging over the winter, the bank should be in a position to start cutting rates again from late 2027, when the storm has passed," ING added.

The euro recovered some lost ground on the dollar, rising to USD1.1232 from USD1.1221 late Monday afternoon. Against the yen, the buck fell to JPY158.07 from JPY158.43.

France will impose new curfews in areas where needed on Tuesday, Prime Minister Sebastien Lecornu said, adding that the measures introduced in several cities the previous day had "helped keep the night calm".

France was rocked on Saturday by some of its worst rioting in recent years, just six months before the country elects a successor to President Emmanuel Macron.

Accused of failing to anticipate and contain the street violence, the government has pledged to restore order, and had announced partial curfews in Paris and some other cities on Monday.

"Targeted curfews have contributed to calm overnight," Lecornu wrote on X.

"Tonight new curfews will be decided where the situation requires it. These decisions will be made on the ground, by the prefects, in coordination with the mayors," he said.

The yield on the US 10-year Treasury was quoted at 5.12% early Tuesday, narrowing from 5.13% on Monday afternoon. The yield on the US 30-year Treasury was quoted at 5.45%, narrowing from 5.47%.

In New York, the Dow Jones Industrial Average fell 0.1% on Monday, while the S&P 500 added 0.4% and the Nasdaq Composite surged 1.1%.

But in Tokyo on Tuesday, the Nikkei 225 fell 1.3%. In China, the Shanghai Composite edged up 0.1%, but in Hong Kong, the Hang Seng Index was down 1.1% in late trade. Sydney's S&P/ASX 200 fell 0.3%.

Gold was quoted at USD4,132.82 an ounce, down from USD4,144.06 at the time of the closing bell on the London Stock Exchange on Monday. Brent oil was quoted at USD110.14 a barrel, up from USD108.29.

Analysts at Deutsche Bank commented: "The respite indeed proved short-lived, with oil prices jumping higher around the European close as Iran's First Vice President Mohammad Reza Aref said that Iran has 'no choice but to exercise sovereignty over the Strait of Hormuz'. So that added to the sense that a deal before the US midterms in two weeks' time is going to be challenging, while investors are also concerned that the US administration may be more likely to escalate against Iran after the midterms as Iran's increased strikes in Hormuz have now slowed the increase in oil flows through Hormuz that had emerged over the previous couple of months."

In London, reports from a pair of major miners received mixed reviews. Anglo American added 1.9%, the best FTSE 100 performer. One-time FTSE 100 listing BHP was down 2.1% in London.

BHP said total copper production declined 19% year-on-year to 400,700 tonnes in the three months ended September 30, while iron ore production increased 3.7% to 66.5 million tonnes.

"Copper production was lower in the first quarter, reflecting planned grade declines and scheduled maintenance, alongside temporary disruptions from severe weather in Chile, stops for safety and the conveyor failure at Carrapateena," commented Chief Executive Officer Brandon Craig.

Panmure Liberum analysts noted BHP's copper output was "5% light versus consensus" of 423,000.

In the third quarter of 2026, Anglo American's copper production fell 5% on-year to 175,000 tonnes from 184,000, while in premium iron ore, it fell 4% to 13.8 million tonnes from 14.3 million. The copper output decline was partly down to extreme weather in Chile.

CEO Duncan Wanblad said the miner is continuing to make "progress on our portfolio optimisation", with the USD3.88 billion sale of its steelmaking coal offering in Australia to Dhilmar "on track to complete by the first quarter of 2027".

It is also continuing to work with the European Commission's regulatory approval process for the sale of its nickel arm. It entered a deal in February 2025 to sell its nickel unit to MMG Singapore Resources for up to USD500 million.

Wanblad added: "At De Beers, we continue to work towards a transaction in a challenging market, having taken decisive action to protect cash and preserve value. Our merger with Teck to form a copper-focused global metals and minerals champion continues to progress and integration planning is now at an advanced stage. We continue to engage constructively with China's anti-trust regulator, with this being the final outstanding regulatory milestone required for completion. Expected completion timing by March 2027 remains unchanged."

Genuit shares slumped 15%. The provider of sustainable water and climate products now expects underlying operating profit of approximately £84 million for 2026, below company-compiled analyst consensus of £91 million to £96 million and down from £94.4 million in 2025.

Genuit said revenue for the nine months to September 30 rose 3.5% to £464.5 million on a reported basis, but fell 4.3% on a like-for-like basis.

On AIM, Shearwater shares rose 5.8%. The cybersecurity firm has won a new £1.7 million contract with an existing central government customer. Shearwater is to provide "advanced threat intelligence capabilities over a two-year period".

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