Lunchtime market roundup: Stocks climb as oil sinks on Hormuz hope

Shares in Europe were higher on Tuesday afternoon as hope of a Strait of Hormuz compromise pushed Brent back below USD100 per barrel, while domestically, investors digested loftier-than-expected UK public sector borrowing data.

The FTSE 100 index rose 18.36 points, 0.2%, at 10,757.37. The FTSE 250 added 132.64 points, 0.5%, at 24,624.01, and the AIM all-share was up 2.50 points, 0.3%, at 797.90.

The Cboe UK 100 rose 0.2% at 1,070.08, the Cboe UK 250 was up 0.8% at 21,402.14, and the Cboe Small Companies climbed 0.3% at 18,881.15.

In European equities on Tuesday, the CAC 40 in Paris was 0.6% higher and the DAX 40 in Frankfurt added 0.5%.

In New York, the Dow Jones Industrial Average is called up 0.2%, and the S&P 500 and Nasdaq Composite up 0.1%.

Brent slumped to USD98.23 a barrel midday Tuesday, from USD100.28 at the time of the London equities close on Monday.

Iran can reopen Hormuz within a week if the US lifts its blockade on Iranian ports, Reuters reported, citing a senior Iranian official.

Saudi exports are also keeping the oil price at bay, XS.com analyst Samer Hasn commented.

"The ongoing drop in crude prices comes amid a lull in Middle East escalation, alongside optimism about the potential restoration of Saudi exports through the Red Sea within days. In contrast, millions of barrels of Saudi crude continue to be exported through the Strait of Hormuz," Hasn commented.

"However, we remain stuck in the gray state represented by a formula of neither peace nor war. The energy market on the ground remains largely disrupted amid high risks of renewed escalation."

The weaker oil price sent BP lower, with shares down 2.3%. But it supported British Airways parent IAG, up 2.5%.

Sterling fell to USD1.3368 midday Tuesday, from USD1.3372 late Monday afternoon. Against the euro, it fell to EUR1.1652 from EUR1.1658. Versus the dollar, the euro traded at USD1.1466, declining from USD1.1470. Against the yen, the buck was lower at JPY157.00 from JPY157.46.

UK public sector borrowing was loftier than expected in August, data on Tuesday showed, on an increase in spending.

The Office for National Statistics said public sector net borrowing amounted to £18.27 billion in August, up from £15.35 billion a year prior and £2.04 billion in July. Borrowing in July is typically lower than other months due to the timing of additional receipts from self-assessed income tax.

The August reading was higher than expected, as the FXStreet-cited consensus had pencilled in borrowing of £15.7 billion.

AJ Bell analyst Russ Mould commented: "Higher than expected government borrowing in August alongside rising gilt yields and higher inflation have caught Prime Minister Andy Burnham and Chancellor John Healey in a spider's web. They might find the only way to break free and achieve their goals is to push up taxes, or lower their ambitions. Otherwise, they could be in a sticky mess and not make any progress.

"Government debt has become more expensive to service, and it seems inevitable that the government's fiscal headroom is shrinking, leaving it with little wiggle room. All signs point towards a potentially difficult budget with businesses and consumers braced for major changes on taxation. Burnham is still fresh in the job and won't want to kick off his tenure with a barrage of bad news. He needs to show there is a plan to drive the economy and make people feel better off."

The yield on the US 10-year Treasury was at 4.93%, narrowing from 4.97%, where it stood at the time of the London equities close on Monday. The 30-year yield narrowed to 5.27% from 5.30%.

Gold fell to USD4,328.41 an ounce early Tuesday afternoon, from USD4,352.65 at the time of the London equities close on Monday.

Back in London, Kingfisher shares shot up 9.6%. It said it saw a "solid" first half performance, and it has lifted annual profit guidance but says the "consumer environment remains mixed". The do-it-yourself retailer's brands include B&Q, Screwfix and Castorama.

Total sales in the six months to July 31 amounted to £6.86 billion, a rise of 0.8% from £6.81 billion a year prior, helping profit surge 18% to £400 million from £338 million. It maintained its interim dividend at 3.8p per share.

"We delivered a solid H1 performance, growing sales, gross margin and profits through market share gains and continued momentum across trade, e-commerce, marketplace and group sourcing. We are building a stronger, more resilient Kingfisher, with our strategic priorities creating new growth opportunities and strong financial discipline supporting performance across the business," CEO Thierry Garnier said.

"While the consumer environment remains mixed, our consistent delivery, strategic progress and opportunities ahead give us the confidence to upgrade our guidance."

Kingfisher now sees adjusted pretax profit for the full year between £595 million and £635 million, its guidance range lifted from £565 million to £625 million.

Elsewhere, M&C Saatchi lost 6.1%. The advertising and marketing group said tough trading seen at the end of 2025 continued early in 2026 but "trading has progressively improved".

M&C has swung to a pretax loss of £161,000 in the first six months of 2026, from profit of £4.3 million a year prior. Net revenue declined 2.7% to £87.8 million from £90.2 million.

"The company is targeting net revenue growth in FY 2026 driven by positive momentum in the Issues and Media Specialisms, supported by regional Advertising growth in the US, UK and Europe. While macroeconomic conditions remain uncertain, the company has shown early signs of improved momentum with Q2 returning to modest LFL top-line growth which we expect to be reinforced by new business activity in the more seasonal H2," the firm said. "The conflict in the Middle East continues to have a significant impact on the group's Sport and Entertainment and consumer-facing businesses in the region."

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