Lunchtime market roundup: Equities rebound as inflation fears ease

London’s blue chip index was higher at midday on Tuesday, mirroring its European counterparts, as a retreating oil price buoyed investor sentiment.

The FTSE 100 index was up 150.33 points, 1.5%, at 10,399.85. The FTSE 250 was up 452.32 points, 2.1%, at 22,550.44, and the AIM all-share was up 11.19 points, 1.5%, at 778.00.

The Cboe UK 100 was up 1.4 at 1,034.60, the Cboe UK 250 was up 1.7% at 19,821.07, and the Cboe small companies was up 0.3% at 17,875.60.

UK and European stock and bond markets rebounded as declining oil and gas prices eased inflation concerns and encouraged traders to unwind more hawkish central bank expectations.

Gains extended through the morning session, with Brent quoted at $91.96 a barrel at midday in London on Tuesday, down from $100.02 late Monday.

However, the head of Saudi Arabian Oil Co, known as Aramco, warned that the war in the Middle East could have ‘catastrophic consequences’ for oil markets, calling the crisis unprecedented.

Chief Executive Officer Amin Nasser stressed the importance of reopening the Strait of Hormuz, which typically carries about 20% of global oil supplies but remains closed due to the conflict.

Nasser spoke as Aramco reported a 12% fall in net income in 2025, citing higher supply, US tariffs and broader economic headwinds.

In European equities on Tuesday, the CAC 40 in Paris was up 1.6%, while the DAX 40 in Frankfurt was up 2.2%.

The pound was quoted at $1.3445 at midday in London, compared to $1.3396 at Monday’s close. The euro stood at $1.1637 against $1.1593. Against the yen, the dollar traded at JP¥157.80, down from JP¥158.13.

US President Donald Trump said on Monday that the war with Iran could be short-lived, despite the country’s appointment of a new hardline supreme leader. Yet he also warned that intensified action could follow if Iran made any ‘attempt to stop the globe’s oil supply’

‘We’re putting an end to all of this threat once and for all, and the result will be lower oil prices, oil and gas prices for American families,’ Trump said.

Monday’s surge in oil prices had prompted a swift rethink of expectations for the Bank of England, briefly pushing markets to fully price in a rate hike this year. With energy prices now retreating, those expectations have reversed again, and investors are once more assigning more than a 50% probability to a rate cut.

Stocks in New York were called mixed. The Dow Jones Industrial Average was seen down 0.1%, as was the S&P 500, while the Nasdaq Composite was called up 0.1%.

The yield on the US 10-year Treasury was quoted at 4.12%, narrowing from 4.13%. The yield on the US 30-year Treasury was quoted at 4.77%, widening from 4.74%.

Small business optimism in the US weakened more than expected in February. The NFIB Small Business Optimism index edged down to 98.8 from 99.3 in January, missing expectations for a rise to 99.7, though it remained above its 52-year average of 98.

Back in London, housebuilders led the gains, supported by well-received annual results from Persimmon and the sharp shift in Bank of England rate expectations.

Persimmon rose 7.0% to top the FTSE 100.

Pershing Square Holdings jumped 5.8% after founder Bill Ackman filed for dual US initial public offerings of his hedge fund and a new fund, marking a significant step for the high-profile activist investor.

Spirax advanced 2.8% after forecasting mid-single-digit organic revenue growth in 2026 despite potential supply chain issues in the Middle East. The thermal energy and fluid technology group reported a 13% decline in pretax profit to £226.5 million in 2025 from £258.9 million.

At the bottom of the blue-chip index, BP and Shell fell 2.5% and 1.4% respectively, pressured by the drop in oil prices.

On the FTSE 250, Genuit surged 10% after reporting a 7.3% rise in 2025 revenue to £602.1 million and a 26% increase in pretax profit to £58.2 million. The company raised its dividend and reaffirmed its medium-term targets, though it cautioned that market conditions remain subdued at the start of 2026.

Among smaller caps, Catenai soared 79% after investee Alludium launched its new agent operating system platform aimed at bringing AI agent capabilities to individuals.

Videndum plunged 62% after announcing a comprehensive refinancing, including an underwritten £85 million equity raise at 270p per share, upsized from £70 million due to strong institutional demand. The transaction cuts pro forma net debt at December 31, 2025 to £31.2 million.

Capita fell 15% after reporting 2025 revenue of £2.31 billion, down from £2.42 billion, and swinging to a pretax loss of £170.9 million from a £116.6 million profit.

The outsourcer said total contract value rose 36% to £2.06 billion and guided for £20 million to £40 million of free cash flow in 2026, though it expects a small fall in adjusted operating margin. RBC Capital Markets cut its price target to 450p from 480p but retained an ’outperform’ rating.

Gold was quoted at $5,172.20 an ounce, up from $5,104.20 late on Monday.

Still to come on Tuesday’s economic calendar are US ADP employment figures and existing home sales.

The US ADP employment change 4-week average is due at 1215 GMT, with the last reading at 12,800. US existing home sales follow at 1400 GMT, with consensus pointing to 3.9 million in February.

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