London close: Stocks manage gains on fresh hopes for Hormuz

27th May 2026 16:54

(Sharecast News) - London stocks finished a choppy session higher on Wednesday, with retailers pacing the advance and oil prices falling below $100 a barrel as investors continued to assess developments in the Middle East conflict.

The FTSE 100 rose 0.13% to 10,505.01, while the FTSE 250 gained 0.25% to 23,384.98.

Brent crude futures were last down 3.85% on ICE at $95.75 per barrel, while the NYMEX quote for West Texas Intermediate fell 4.14% to $90.00.

Axel Rudolph, chief technical analyst at IG, said: "Crude fell to a five-week low after Iranian state television reported that a potential agreement with the US could lead to the reopening of shipping through the Strait of Hormuz."

Oil prices slid further in the afternoon after a report that Iran was committed to restoring commercial shipping through the Strait of Hormuz to pre-war levels within a month.

Reuters, citing Iran's state TV, reported that Tehran had obtained a draft of an initial unofficial framework for a memorandum of understanding with the US.

Under the framework, Iran would restore commercial transit through the Strait of Hormuz within a month, while the US would withdraw military forces from Iran's vicinity and lift a naval blockade.

Al Jazeera, citing Iran's state broadcaster, said US military vessels would not be covered by the draft arrangement, and that ship traffic through Hormuz would be managed by Iran in coordination with Oman.

The framework was not yet final, however, and Iran would not proceed without "tangible verification".

Rudolph said: "Crude prices fell to a five-week low as hopes of easing Middle East tensions improved sentiment.

"Reports that a potential US-Iran agreement could reopen Strait of Hormuz shipping eased fears of major energy disruption, offering relief to markets and central banks, though investors remain cautious pending concrete details."

AJ Bell head of financial analysis Danni Hewson added that continued suggestions that a deal to resolve the conflict between the US and Iran was moving closer helped sustain "some optimism" in the market on Wednesday.

"The FTSE 100 failed to share in the larger gains elsewhere thanks to its heavy weighting towards oil and gas companies," she said.

"For large periods of the crisis, the presence of BP and Shell has been a boon for the index - but right now it is a millstone around its neck.

"Energy utility names were also under pressure following the announcement of a hike in the UK energy price cap by Ofgem from July.

"Oil prices remain volatile but right now are firmly below the $100 per barrel danger zone amid speculation Tehran would allow pre-war levels of shipping through the Strait of Hormuz within a month of any agreement.

"Government bond yields have also retreated as investors weigh the implications for inflation and, in turn, interest rates."

Grocery inflation eases in May

In economic news, grocery inflation eased in May, according to Worldpanel by Numerator.

Like-for-like grocery prices rose 3.1% in the four weeks to 17 May, down from 3.8% in April and the slowest rate of increase since December 2024.

Overall take-home sales growth rose 1.5%, while 30.3% of sales included a promotion, up from 28.4% a year earlier.

Fraser McKevitt, head of retail and consumer insight at Worldpanel by Numerator, said: "The easing in the rate of inflation is welcome news for shoppers who have been grappling with warnings of a hike in food prices due to the impact of the war in the Middle East."

Lidl's market share reached a record 8.6% in the 12 weeks to 17 May, up 0.5 percentage points year on year, making it Britain's fifth-largest grocer.

Tesco's sales rose 3.2%, lifting its market share to 28.2%, while Sainsbury's sales increased 3.1% and its share edged up to 15.2%.

Asda's market share stood at 11.5%, followed by Aldi at 10.8% and Morrisons at 8.3%.

Marks & Spencer sales jumped 9.3%, while Ocado remained the fastest-growing grocer, with sales up 10.2%.

In US data, mortgage applications fell 8.5% in the week ended 22 May, according to the Mortgage Bankers Association, as higher interest rates weighed on demand.

Refinance applications slumped 18%, while purchase applications dipped 0.4%.

The average rate on a 30-year fixed mortgage with conforming loan balances rose to 6.65% from 6.56%, its highest level since August 2025.

The Richmond Federal Reserve's manufacturing index meanwhile rose to 13 in May from 3 in April, with shipments, new orders and employment all improving.

Shipments increased to 16 from minus 2, new orders rose to 17 from 8, and employment edged up to 3 from 0.

Retailers in the green, oil plays slide

In equity markets, retailers were among the strongest performers.

JD Sports Fashion rose 5.56%, Marks & Spencer gained 3.91%, Frasers Group advanced 4.01% and Currys added 0.83%.

"Retail names led the way in London, along with travel stocks and housebuilders, as the prospects for an improved consumer backdrop off the back of any peace deal increase in relevance," Hewson said.

Pets at Home jumped 6.48% after reporting lower full-year profit and revenue but saying it had made "material" progress over the past six months in stabilising its retail business.

Hollywood Bowl surged 13.46% after the ten-pin bowling operator posted higher interim profit and revenue, lifted its dividend and pointed to "robust" demand for affordable leisure experiences.

"Appropriately enough, investors were bowled over by the latest results from Hollywood Bowl," Hewson said.

"The bowling alley operator is successfully navigating cost of living pressures amid strong UK demand for affordable leisure pursuits.

"A dynamic pricing model based on demand is playing its part in keeping sites full.

"This helps drive additional revenues as some customers splash out on VIP packages or use the arcade machines which surround the lanes.

"Hollywood Bowl's model has been built on sprucing up its venues and making them attractive places for people to visit.

"This has allowed the brand to strike a chord with people looking for somewhere to unwind which is not dependent on the notoriously unreliable UK weather.

"The 10% increase in the dividend and £5 million share buyback is a show of confidence on the part of management, and it continues to rollout new sites both in the UK and in Canada."

Tate & Lyle rose 0.42% after Berenberg lifted its target price on the stock to 554p from 464p, while Cranswick gained 2.96% after RBC Capital Markets upgraded the meat producer to 'outperform' from 'sector perform'.

HICL Infrastructure advanced 3.26% after reporting a stronger annual performance, with net asset value growth supported by portfolio disposals, operational outperformance and active capital allocation.

On the downside, BP fell 2.95% and Shell lost 2.65% as oil prices slumped on hopes of improved commercial shipping through the Strait of Hormuz.

Greencore tumbled 9.56% after the food producer swung to a first-half operating loss of £13.4m from a profit of £38.1m a year earlier, mainly due to its £1.2bn acquisition of Bakkavor and £60.6m of exceptional transaction and integration costs.

Reporting by Josh White for Sharecast.com.