Early market roundup: Stocks down as OECD cuts UK 2027 growth forecast

Stock prices in London were lower on Wednesday morning as the OECD upgraded its forecast for UK gross domestic product growth for 2026 but cut its forecast for 2027 growth.

The FTSE 100 index opened down 42.47 points, 0.4%, at 10,331.04. The FTSE 250 was down 110.36 points, 0.5%, at 23,266.79, and the AIM all-share was down 2.42 points, 0.3%, at 815.90.

The Cboe UK 100 was down 0.5% at 1,026.76, the Cboe UK 250 was down 0.5% at 19,934.64, and the Cboe small companies was marginally lower at 18,914.35.

In European equities on Wednesday, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was down 0.8%.

Geopolitical risks remained elevated as the US and Iran intensified attacks, raising concerns that the fragile ceasefire could unravel and peace negotiations could stall.

US forces said they intercepted multiple Iranian ballistic missiles and drones and launched defensive strikes in response. According to US officials, Iran fired several ballistic missiles toward regional neighbours, though none hit their intended targets.

Iran’s Revolutionary Guard Corps claimed responsibility for attacks on the US Fifth Fleet headquarters, as well as an airbase and helicopters. Tehran is reviewing an agreement proposed by Washington to pause the war, though Iranian media reported that there has been no direct communication with the US for several days.

Despite the heightened tensions, President Donald Trump insisted that peace talks remain ongoing.

Iranian media outlets have suggested negotiations between Tehran and Washington are continuing, a day after reports that talks had been suspended. However, Iran’s top negotiator warned of possible escalation if Israel’s attacks on Lebanon continue.

Brent oil was trading at $97.99 a barrel early Wednesday, up from $94.68 late Tuesday.

The pound was quoted at $1.3460 early Wednesday, lower than $1.3475 at the London equities close on Tuesday. Against the euro, sterling was unchanged at €1.1578.

The euro traded at $1.1621 early Wednesday, lower than $1.1638 late Tuesday. Against the yen, the dollar was quoted at JP¥159.68, down from JP¥159.89.

On the macro front, the Organisation for Economic Co-operation & Development said the UK economy is set to grow by 0.9% this year, an upgrade from its previous 0.7% forecast in March, partly reflecting stronger-than-expected first-quarter growth of 0.6%.

However, the OECD warned that growth will slow from 1.4% last year, as renewed inflationary pressures squeeze real incomes and weigh on consumer spending and investment. The body also cut its growth forecast for 2027 to 1.1% from 1.3%, citing continued disruption from the war in Iran.

The Paris-based organisation cautioned that the economic consequences of the conflict are likely to persist even after its resolution.

It forecast global growth of 2.8% this year, down from 3.4% in 2025, before rising to 3.1% in 2027. If the Middle East conflict lasts well into 2027, global growth could fall to 2.1% this year and 1.8% next year.

The OECD expects US growth to come in at around 2% this year and 1.8% in 2027.

Back in London, Howden Joinery topped the FTSE 100, up 2.4%, after agreeing to acquire online retailer DIY Kitchens for an enterprise value of £390 million. The consideration comprises £292.5 million in cash and £97.5 million in new Howden shares.

Howden said DIY Kitchens generated £136 million in revenue and £37 million in earnings before interest and tax in 2025, and has achieved annual revenue growth of more than 17% over the past five years.

The acquisition gives Howdens direct access to non-trade consumers through DIY Kitchens’ online-only model, while the business will continue to operate separately from Howdens’ larger trade-only operations following completion.

On the FTSE 250, B&M European Value Retail jumped 12% despite reporting a 47% fall in pretax profit to £227 million for the financial year ended March 28, from £431 million a year earlier. The retailer cut its total ordinary dividend to 9.6 pence per share from 15.0p.

B&M described financial 2026 as a ‘difficult year’, though adjusted earnings before interest, tax, depreciation and amortisation fell 26%, in line with guidance. Supporting the stock, the company said it is confident it can offset rising energy costs in the year ahead through savings.

‘In the medium term, we continue to see no reason why B&M UK cannot return to double-digit Ebitda margins,’ the company said.

At the bottom of the mid-cap index, Ninety One fell 7.4% despite reporting assets under management of £171.8 billion at March 31, up 31% from £130.8 billion a year earlier.

The increase was driven by the £18.3 billion Sanlam asset management business take-on, positive net inflows of £2.8 billion and £19.9 billion of market and foreign exchange gains.

The London and Cape Town-based money manager raised its total dividend by 10% to 13.4p per share, including a final payout of 7.4p, and expanded its share buyback programme to £55 million from £30 million.

Among smaller caps, Marechale Capital surged 38% after proposing the acquisition of Stanford Capital Partners and NJC Capital Management VSA Private Fund via share-for-share exchanges. The company said the proposed transactions would involve the issue of 75.2 million new shares at 1.75p each.

In Asia on Wednesday, the Nikkei 225 index in Tokyo closed up 2.5%, after Japan’s cabinet approved a $19 billion supplementary budget aimed at helping households cope with rising living costs linked to the Iran war. The prime minister’s office said the cabinet approved JP¥3.114 trillion in additional spending.

In China, the Shanghai Composite ended 0.2% higher, while the Hang Seng index in Hong Kong closed 1.6% lower. The S&P/ASX 200 in Sydney finished up 0.7%.

In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.5%, the S&P 500 up 0.1% and the Nasdaq Composite marginally higher.

The yield on the US 10-year Treasury was quoted at 4.48%, widening from 4.45%. The yield on the US 30-year Treasury was quoted at 4.99%, widening from 4.96%.

Gold was quoted at $4,459.22 an ounce early Wednesday, lower than $4,503.10 on Tuesday.

Still to come on Wednesday’s economic calendar are eurozone composite PMI, UK composite PMI, eurozone producer price index, US ADP unemployment data, US MBA mortgage applications, Canada composite PMI, US composite PMI, US ISM services PMI, US factory orders and US EIA crude oil stocks.

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