(Alliance News) – Stock prices in Europe were on the decline on Tuesday afternoon, with oil majors leading the FTSE 100, as Brent continued to rise as Middle East peace hope dwindled.
Brown Brothers Harriman analysts commented: “Confidence the Strait of Hormuz re-opens anytime soon is fading as the US hardened its position by attaching deal-breaking negotiating conditions on Iran.
“We see crude oil prices driving the war narrative, with price swings likely to dictate the pace of escalation and de-escalation. That should keep Brent crude oil prices within a broad USD70 to USD100 range.”
A barrel of Brent surged to USD89.21 on Tuesday afternoon, from USD86.35 at the time of the London equities close on Monday.
The FTSE 100 index traded up just 5.00 points at 10,867.50. Shell and BP topped the index, with rises of 1.6% and 1.9% as oil climbed.
The FTSE 250 declined 36.13 points, 0.2%, at 24,708.41. The AIM all-share was up 0.86 of a point, 0.1%, at 797.24.
The Cboe UK 100 was flat at 1,080.18, the Cboe UK 250 was down 0.2% at 21,509.79, and the Cboe small companies was largely unmoved at 18,972.32.
In European equities on Tuesday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was slightly lower.
The pound ebbed to USD1.3500 on Tuesday, from USD1.3522 late Monday. Against the euro, it fell to EUR1.1698 from EUR1.1708. The euro faded to USD1.1536 from USD1.1549.
Against the yen, the buck rose to JPY159.26 from JPY158.92.
The yield on the 10-year US Treasury widened to 4.73% early Tuesday afternoon from 4.70% on Monday. The 30-year yield stretched to 5.27% from 5.24%.
Trump said Monday he would seek conflict compensation from Iran as part of any peace negotiations, citing attacks and killings stretching back decades allegedly backed or perpetrated by Tehran.
The US president’s announcement was a direct response to Tehran’s demand for US war reparations as a precondition to any resolution of the crisis.
Trump’s remarks came a day after he said he was “low-keying” his approach to the conflict, suggesting he was prepared to let economic pressure mount in place of further military strikes.
Lloyds Banking analysts commented: “President Trump making demands for US compensation from Iran to form part of any negotiations has served to further solidify expectations that significant progress on restoring normal levels of traffic through the Strait of Hormuz is out of reach.”
The rise in the oil price lifted Harbour Energy and Ithaca Energy, the duo rising 2.9% and 2.1%.
Gold climbed to USD4,377.50 an ounce midday on Tuesday, from USD4,350.91 late Monday afternoon.
In New York on Tuesday, the Dow Jones Industrial Average is called down slightly, the S&P 500 up 0.1% and the Nasdaq Composite up 0.3%.
The odds of a Federal Reserve hike next month moved back above 50%, prompted by an oil price rise stoking inflation worry, after sinking following a softer-than-expected US jobs report on Friday.
Analysts at Deutsche Bank commented: “So after last week when it felt like the doves were in the ascendant again, the latest news has pushed things in a more hawkish direction, with yields and commodity prices both moving higher.”
Wednesday’s US consumer price index reading will be key for Federal Reserve interest rate expectations. According to consensus cited by FXStreet, a slowdown in the annual rate of inflation to 3.4% in July from 3.5% in June is expected.
In London, Spirax fell 5.8%. An unchanged outlook weighed on shares in the thermal energy and fluid technology company, AJ Bell analyst Dan Coatsworth believes.
“Investors were disappointed by the lack of upgrades to earnings guidance,” the analyst said.
Spirax still expects mid-single-digit organic growth in revenue for 2026.
It said pretax profit in the first half of 2026 climbed 54% to GBP135.4 million from GBP87.9 million a year before, with revenue up 5.1% to GBP863.8 million from GBP822.2 million.
The insurance sector was also on the decline, Legal & General down 4.6% and M&G 3.5% lower. UBS cut both to ‘sell’. Goldman Sachs also cut Legal & General to ‘sell’.
UBS said it prefers both Standard Life and Aviva, though shares in the duo fell 2.8% and 1.4%.
Elsewhere, Medpal AI climbed 7.4% as the digital health and pharmacy group noted the UK’s Medicines & Healthcare products Regulatory Agency became the first nation in Europe to back Foundayo, Eli Lilly’s once daily oral GLP-1 tablet.
Medpal AI added: “Foundayo is not currently available on the NHS and remains subject to evaluation by the National Institute for Health & Care Excellence. Private provision, the market in which the group’s dedicated GLP-1 clinic New Health operates, is presently the only route to access.”
New York-listed Eli Lilly has been at the heart of the weight loss drug craze, alongside Copenhagen-listed peer Novo Nordisk. But stock market fortunes between the duo have diverged more recently, with Eli Lilly shares almost doubling over the past 12 months, but Novo falling around 5%.
Last week, Eli Lilly said net income in the second quarter of the year climbed 25% to USD7.10 billion from USD5.66 billion. Reported earnings per share were 26% higher at USD7.94, climbing by a third on a non-GAAP basis to USD8.38.
Revenue shot up 48% on-year to USD22.97 billion from USD15.56 billion, beating the Visible Alpha consensus of USD20.4 billion.
By Eric Cunha, Alliance News news editor
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