London close: Stocks finish lower as Brent tops $100

23rd Jul 2026 15:29

(Sharecast News) - London stocks closed lower on Thursday, while oil prices continued to climb as tensions between the US and Iran escalated and investors digested a fresh batch of corporate updates.

The FTSE 100 fell 0.73% to 10,639.17, while the FTSE 250 dropped 1.25% to 23,627.33.

Sterling was also weaker, with the pound down 0.46% against the dollar at $1.3314 and 0.13% lower versus the euro at €1.1705.

Chris Beauchamp, chief market analyst at IG, said surging volatility, rampant oil prices and rising bond yields were combining to spook stock markets.

"Brent oil futures hit the dreaded three figures today, marking yet another solid day of gains as escalation continues in the Middle East," he said.

"Volatility is surging and equities are moving further into the red as a return to full-blown conflict now looms, potentially drawing in Israel and more countries in the region.

"Stocks have been trying to put in a bottom all week, but the lack of any really weighty good news in Alphabet's results robbed them of the last big catalyst for the week, leaving the field to the sellers.

"Meanwhile government bond yields continue to climb, spelling major trouble for developed economies and risking a repeat of the March/April 2025 market panic."

Oil prices rose sharply, with Brent crude futures last up 6.78% on ICE at $100.45 per barrel, and the NYMEX quote for West Texas Intermediate 6.05% firmer at $92.08.

In a post on Truth Social on Wednesday, Donald Trump warned that any Iranian attack on ships in the Strait of Hormuz would prompt the US to "bomb and destroy ONE BRIDGE OR POWER PLANT", including sites in or near Tehran.

Danni Hewson, AJ Bell head of financial analysis, said: "It's been a tough day for markets on both sides of the Atlantic as the oil price surged higher, with the price of a barrel of Brent crude hopping back over the psychologically important $100 a barrel benchmark.

"With nerves about the potential inflationary impact of the escalating conflict in the Middle East colliding with worries about soaring tech capex it's been tough to find the optimism, even if London markets enjoyed a continued boost from big oil and defence stocks as investors adjust to the changing political and geopolitical landscapes.

"It's worth remembering that at the start of the month the price was hovering around $70 a barrel and markets had dared to hope that central bankers might be able to seamlessly shift from a pause to further cuts."

On home shores, new prime minister Andy Burnham announced a 20% cut in business rates for pubs, clubs and live music venues across England.

The measure, which will cost around £100m a year, will be partly funded by reviewing reliefs for businesses that "do not make a positive contribution to local communities", such as vape shops.

"It was notable that Andy Burnham's big move on business rates for pubs didn't really cut through to markets, with Wetherspoon's and Whitbread stuck in reverse even as Fuller's enjoyed a small bounce," Hewson said.

"The PM has promised that it's only a first step and it is a welcome sign that he is listening to the concerns being raised across the hospitality sector and beyond, but it's a small fix and one that won't come in for many months.

"Much of the devil will also be in the detail, with some venues unsure if they will qualify, and others doing the sums and finding that even with the combined cuts from this and the previous government they'll still be paying considerably more than before April's changes."

ECB stands pat on rates, as expected

In economic news, the European Central Bank left interest rates unchanged despite the recent rise in oil prices, while warning that the inflationary impact of the Middle East conflict had yet to fully play out.

The deposit facility rate was held at 2.25%, after a 25 basis point increase in June, while the main refinancing rate and marginal lending facility were left at 2.4% and 2.65%, respectively.

The ECB said the outlook for energy prices remained "highly volatile" and close to the baseline of its June projections, while still well above levels seen before the Middle East conflict.

It added that uncertainty remained high and that it was monitoring the intensity and duration of the shock, as well as indirect and second-round effects.

In the US, initial jobless claims fell by 22,000 to 187,000 in the week ended 18 July, the lowest level in almost 60 years and well below expectations for a rise to 212,000.

Continuing claims slipped by 2,000 to 1.79m, while the four-week moving average fell by 7,250 to 207,500.

Back in the UK, the latest CBI Industrial Trends survey showed that new manufacturing orders fell in July at the fastest pace in six years.

The total new orders balance declined to -24 from -22 in April, reflecting weakness in both domestic and export orders, while the output volumes balance improved to -24% from -33% in the three months to June.

Ben Jones, CBI senior lead economist, said manufacturers were being "squeezed from both sides", with rising costs and weak demand limiting their ability to raise prices.

He said cutting industrial electricity costs, which remain around 45% above the G7 median, would help give manufacturers confidence to invest, expand and create jobs.

Consumer sentiment meanwhile improved in July, according to the British Retail Consortium, helped by England's World Cup progress and a more stable political backdrop.

Expectations for the economy rose to -37 from -43 in June, while personal financial expectations improved to -12 from -15 and savings expectations rose to -4 from -9.

Helen Dickinson, chief executive of the BRC, said the rise may have been driven partly by Burnham's confirmation as prime minister and "a national feel good factor" from England's World Cup run.

However, she cautioned that only around one in ten consumers expected the economy to improve, while spending intentions remained modest.

3i Group surges, Centrica slides

In equity markets, 3i Group surged 4.78% after saying its largest holding, Dutch discount retailer Action, delivered a strong first-quarter performance.

Segro jumped 7.22% after saying late on Wednesday that it would be minded to recommend a £14bn final takeover approach from US logistics group Prologis should a firm offer be made.

Aston Martin Lagonda rose 3.97% after announcing a new £550m debt financing with BlackRock-owned HPS Investment Partners, strengthening its balance sheet and supporting its long-term growth plans.

easyJet gained 2.7% despite reporting a fall in third-quarter headline pre-tax profit to £85m from £286m a year earlier, as high fuel prices and softer demand following the Middle East conflict weighed on trading.

The shares recovered from heavy losses on Wednesday linked to concerns over a possible EU review of airline ownership rules.

Relx edged up 0.02% after the information and analytics group reaffirmed its full-year outlook and posted higher first-half revenue and profit, while Shell rose 1.56% as oil prices jumped following reports of attacks on Saudi tankers in the Red Sea and renewed threats from Trump against Iranian infrastructure.

On the downside, Centrica slid 10.04% after the British Gas owner reported softer first-half earnings, hit by production outages and Spirit Energy disposals, and announced plans to cut around 1,300 jobs.

Mitchells & Butlers fell 5.09% after saying third-quarter sales had been hit by the heatwave, while Morgan Sindall lost 4.49% despite posting record half-year results and reiterating full-year expectations.

AJ Bell dropped 3.01% and Jupiter Fund Management fell 2.82% after both financial services groups published results.

Reporting by Josh White for Sharecast.com.