Early market roundup: Shares lower as war in Iran continues; oil up

Stock prices in London opened lower on Wednesday as investors were more risk-averse amid the continuous war between the US-Israel and Iran; with the oil price higher but UK-listed defence stocks generally lower.

The FTSE 100 index opened down 89.41 points, 0.9%, at 10,322.83. The FTSE 250 was down 126.94 points, 0.6%, at 22,365.33, and the AIM all-share was down 1.58 points, 0.2%, at 777.22.

The Cboe UK 100 was down 0.8% at 1,027.23, the Cboe UK 250 was down 0.9% at 19,603.71, and the Cboe small companies was down 0.1% at 17,821.98.

The US military said it had ‘eliminated’ 16 Iranian mine-laying ships in the Strait of Hormuz after President Donald Trump warned Tehran not to deploy mines in the vital shipping lane. Meanwhile, three commercial vessels were reportedly damaged by ‘unknown projectiles’ in the area.

Iran continued strikes across the region, including in Saudi Arabia, the UAE and Kuwait. Four people were injured when two drones fell near Dubai airport, though air traffic was not affected.

Israel launched renewed attacks on Iran and Lebanon, with reports of a strike on an apartment building in central Beirut. Earlier, Iran’s police chief warned that any domestic protests would be dealt with ‘in the same way we deal with the enemy’.

Amid the turmoil, Brent oil was trading at $89.39 a barrel early Wednesday, up from $87.92 late Tuesday.

Energy ministers from the G7 said they ‘stand ready’ to take ‘all necessary measures’ in coordination with the International Energy Agency to address rising crude prices. The Wall Street Journal reported that the IEA had proposed its largest ever release of oil reserves to counter price spikes driven by the US-Israeli war with Iran.

Following a virtual meeting with the IEA’s executive director, G7 ministers said they would carefully consider the recommendations.

In European equities on Wednesday, the CAC 40 in Paris was down 0.7%, while the DAX 40 in Frankfurt fell 1.3%.

Among notable earnings in Europe, Inditex, the owner of Zara, rose 5.3% in Madrid after posting record profit for 2025. In contrast, German defence firm Rheinmetall fell 4.6% in Frankfurt. Chief Executive Armin Papperger said ‘the world is changing rapidly, and Rheinmetall is well prepared,’ but the company flagged slightly weaker momentum expected in 2026.

In Germany, final data confirmed that annual inflation slowed to 1.9% in February from 2.1% in January, matching the flash estimate. On a monthly basis, consumer prices rose 0.2%. The harmonised index of consumer prices increased 2.0% year-on-year and 0.4% month-on-month.

Food price inflation eased to 1.1% from 2.1%, with sharp declines in edible fats and oils offsetting higher confectionery prices.

Sterling was quoted at $1.3412 early Wednesday, down from $1.3458 at Tuesday’s close. The euro traded at $1.1604, lower than $1.1648. Against the yen, the dollar was at JP¥158.40, up from JP¥157.56.

Losses were broad-based on the FTSE 100. Rolls-Royce Holdings and Babcock fell 2.6% and 2.3%, while BAE System was down 2.2%, while the two largest London-listed companies by market capitalisation, HSBC and AstraZeneca, were both down 1.0%, among the biggest point-drags on the index as a risk-off tone prevailed.

Legal & General Group was the worst performer, down 5.3%, after reporting higher 2025 operating earnings but missing expectations on its solvency ratio.

The insurer posted a 6% rise in core operating profit to £1.62 billion and a 9% increase in core operating earnings per share to 20.93p. It announced plans to launch a record £1.2 billion share buyback as part of a £2.4 billion capital return programme and proposed a final dividend of 15.67p, taking the total for 2025 to 21.79p. However, new business profit declined year-on-year.

On the FTSE 250, Balfour Beatty led gains, up 6.5%, after reporting higher annual revenue and profit and announcing a £200 million share buyback for the year.

Canal+ dropped 17% despite reporting higher 2025 revenue and profit and outlining further growth plans following its acquisition of MultiChoice Group.

Revenue rose to €6.95 billion from €6.42 billion, and pretax profit increased to €153 million from €78 million. Adjusted Ebit before exceptional items, excluding MultiChoice, was €701 million. The company proposed a dividend of €0.022 per share, up 10%, and expects adjusted Ebit of around €735 million in 2026.

It also said it anticipates listing on the Johannesburg Stock Exchange ‘soon’, following its takeover of MultiChoice in October.

Among smaller caps, Light Science plunged 60% after announcing acquisitions of RLUK Injection and the remaining 10% of UK Circuits for up to £5.4 million.

The Derbyshire, England-based agricultural lighting and monitoring systems provider launched a retail offer of up to £600,000 and said firm and conditional placings would raise up to £6.0 million at 1 pence per share, bringing total fundraising to up to £6.6 million.

Tapir Holdings began trading on AIM in London. The strategic investment holding company, also listed on the Bermuda Stock Exchange, is 76% owned by Chair Michael Ashcroft, the former deputy chair of the Conservative Party.

In aviation updates, Gatwick Airport reported a lower annual profit for 2025, with passenger numbers down 1.1% to 42.8 million, mainly due to temporary aircraft availability issues affecting short-haul routes.

Heathrow, by contrast, recorded its busiest ever February, with passenger numbers up 1.9% to 5.82 million, helped by half-term travel and Chinese New Year. Heathrow said it is closely monitoring developments in the Middle East and working with airlines to manage additional flight requests.

In Asia on Wednesday, the Nikkei 225 in Tokyo closed up 1.4%. The Shanghai Composite rose 0.3%, while the Hang Seng slipped 0.2%. The S&P/ASX 200 in Sydney gained 0.6%.

In the US on Tuesday, Wall Street ended mixed after surrendering earlier gains. The Dow Jones Industrial Average down 0.1%, the S&P 500 down 0.2% and the Nasdaq Composite ended marginally higher.

US February consumer price index data are due at 1230 GMT, with consensus expecting annual inflation of 2.4%, unchanged from January.

While CPI data typically represent a key event risk for markets, current trading remains heavily influenced by geopolitical developments, and the report may have a limited impact given it predates the recent energy price shock.

The yield on the US 10-year Treasury was quoted at 4.17%, widening from 4.11%. The yield on the US 30-year Treasury was quoted at 4.81%, widening from 4.74%.

Gold was quoted at $5,186.30 an ounce early Wednesday, down from $5,228.60 on Tuesday.

Still to come on Wednesday’s economic calendar are US CPI and the US monthly budget statement.

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