Early market roundup: Shares lower; Nagel hints ECB interest rate hike

Stock prices were lower on Wednesday morning in London, following Asian stocks into the red as oil prices jumped while the US and Iran traded strikes; meanwhile investors digested signals that the European Central Bank is on course to raise interest rates next week.

The FTSE 100 index opened down 32.83 points, 0.3%, at 10,756.45. The FTSE 250 was down 110.26 points, 0.5%, at 24,411.03, and the AIM all-share was down 4.94 points, 0.6%, at 791.12.

The Cboe UK 100 was down 0.3% at 1,070.03, the Cboe UK 250 was down 0.5% at 21,234.64, and the Cboe small companies was marginally lower at 18,973.53.

In European equities on Wednesday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was down 0.4%.

European Central Bank Governing Council member Joachim Nagel signalled that policymakers are on track to raise interest rates at next week's meeting, although he remained cautious about the path beyond September.

"Markets are pricing in a probability of more than 95% that we'll raise interest rates at our September meeting, and I'd say that the markets have a rather good understanding of how we're likely to respond at this stage," the Bundesbank president told Le Monde.

Nagel declined to give guidance on further moves, however, saying the ECB's meeting-by-meeting approach had served it well.

"Beyond that September meeting, however, I'm cautious about giving any specific guidance," he said. "Oil and gas prices keep fluctuating. Financial markets are highly volatile. There is a great deal of uncertainty. It's an uncomfortable situation – also from a monetary-policy perspective."

Oil prices rose sharply after US forces struck Iran's Revolutionary Guards in response to what Washington said were attempted attacks on commercial shipping and American troops, fuelling fears of further disruption around the Strait of Hormuz.

Brent crude climbed to USD94.74 a barrel early Wednesday from USD92.48 late Tuesday.

US President Donald Trump said the strikes were in retaliation for Iran's alleged attempt to lay sea mines in the strategic waterway and missile launches towards a US base in Jordan, warning Tehran of a tougher response to any retaliation.

Iranian state media reported explosions in the country's south, while Iran's Revolutionary Guards later claimed responsibility for a ballistic missile attack on a US base in Jordan. Jordan's military said it intercepted most of the missiles and reported no injuries.

The pound was quoted at USD1.3514 early Wednesday, lower than USD1.3527 at the London equities close on Tuesday. Against the euro, sterling fell to EUR1.1669, unchanged from a day prior.

The euro traded at USD1.1580 early Wednesday, lower than USD1.1593 late Tuesday. Against the yen, the dollar was quoted at JPY159.72 versus JPY160.07.

Back in London, InterContinental Hotels Group rose 1.8% after UBS upgraded the hotel operator to 'buy', with a price target of USD188.

Halma edged 0.3% higher after acquiring Texas-based water quality monitoring specialist Pyxis for an initial cash consideration of USD170 million, around £126 million.

The deal includes up to a further USD30 million in earn-out payments tied to performance through March 2029 and will be funded from Halma's existing facilities.

Pyxis, founded in 2013 and headquartered near Houston, provides real-time water quality sensors and monitoring systems and will join Halma's Environmental & Analysis sector. It is forecast to generate unaudited revenue of around USD39 million, or £29 million, in the 12 months to March 31, 2027.

Pyxis will continue to operate as a standalone business under its existing management team.

BP edged 0.1% lower after promoting Ian Tyler to permanent chair with immediate effect following an extensive search process involving internal and external candidates.

Tyler, who joined the BP board as a non-executive director in April 2025, has served as interim chair since May. He also chairs Grafton Group and serves as senior independent director at Anglo American. BP said its board unanimously backed the appointment.

Separately, Senior Independent Director Amanda Blanc said she will not stand for re-election at BP's 2027 annual general meeting and will leave the board once a successor has been appointed, having overseen the chair succession process. Blanc is also chief executive officer of insurer Aviva.

On the FTSE 250, AEP Plantations lost 4.3% despite reporting higher first-half revenue and profit.

Revenue rose 8.3% to USD249.7 million from USD230.5 million a year earlier, while pretax profit increased 5.1% to USD65.8 million from USD62.8 million. Crude palm oil output rose 4.3% to 223,600 tonnes from 214,300 tonnes.

AEP said it expects the production trend to continue and expects to benefit from trading with Pinago. It plans to declare an interim dividend by the end of the third quarter.

Among smaller caps, Kazera Global jumped 33% after securing a 10-year mining right for 2A, triggering a USD1.75 million payment.

In Asia on Wednesday, the Nikkei 225 index in Tokyo closed 2.9% lower. In China, the Shanghai Composite ended down 1.0%, while the Hang Seng index in Hong Kong closed 0.2% lower. The S&P/ASX 200 in Sydney closed 1.0% lower.

Meanwhile, revenue from Taiwan's semiconductor industry is expected to surge 40% in 2026, driven by soaring demand for artificial intelligence technology.

Taiwan Semiconductor Industry Association President Wu Chih-i said AI was driving the development of new technology in the sector.

"We are in a new era of the semiconductor industry from a technology point of view," Wu said at the opening of the SEMICON expo in Taipei.

Taiwan is a global powerhouse in chip manufacturing, producing nearly all of the world's most advanced semiconductors, although its dominance has become a source of friction with the US.

Trump has accused Taiwan of taking America's chip industry and pushed Taiwanese companies to expand manufacturing in the US.

In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.8%, the S&P 500 down 0.7% and the Nasdaq Composite down 1.0%.

The yield on the US 10-year Treasury was quoted at 4.80%, widening from 4.77%. The yield on the US 30-year Treasury was quoted at 5.28%, widening from 5.25%.

Gold was quoted at USD4,329.84 an ounce early Wednesday, lower than USD4,364.48 on Tuesday.

Still to come on Wednesday's economic calendar, Ireland releases unemployment data, while the US publishes the ADP employment report for August and factory orders for July. Canada announces its latest interest rate decision, with a hold at 2.25% widely expected.

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