London Quick Take - Wednesday - UK stocks lag as oil majors weigh down the index

UK

FTSE 100

UK gains are lagging Europe due to a lack of tech exposure, as chipmakers rally on optimism spilling over from Asian markets. Chipmakers SK Hynix and Micron have surged towards a $1 trillion market cap milestone, while semiconductor names such as ASML and Infineon are among the biggest contributors to Euro Stoxx 50 gains. Meanwhile, oil majors BP and Shell are weighing on the UK index following a drop in oil prices.

BP

BP fired Chairman Albert Manifold yesterday after just eight months in the role, citing “governance oversight and conduct issues,” which Manifold says was done without warning. The move reintroduces uncertainty at the oil major, coming shortly after the appointment of Carol Howle as CEO and following BP’s strategic shift last year away from renewables and back towards oil and gas.

Energy Prices

Ofgem, the UK energy regulator, has raised the energy price cap by 13% to £1,862 per year from July, driven by wholesale gas prices rising 45% since the start of the US–Iran conflict. The £221 increase is the largest in two years. If the Strait of Hormuz reopens, energy prices could fall, potentially limiting further upside in bills. The higher cap will add to inflationary pressure, though with signs of a slowdown in the UK economy, second‑round effects may be more limited.

UK Consumer Data

UK grocery inflation eased to 3.1% in the four weeks to 17 May, the slowest pace since December 2024, according to Worldpanel by Numerator. The data provides an early indication of food pricing pressures ahead of official UK inflation figures due on 17 June. Worldpanel also found that 30.3% of sales were on promotion over the period, helping consumers save money.

Politics

Tony Blair criticised the Labour Party in an essay for his think tank, the Tony Blair Institute for Global Change, warning it was “playing with fire”. He called for a shift in policy, including cutting welfare spending and prioritising economic growth.

Gilts

10‑year gilt yields have fallen to 4.82% from a peak of 5.17% in mid‑May 2026, with the recent pullback reflecting easing political uncertainty and reduced expectations of a Bank of England rate hike.

US

Equities

After the US close today, Salesforce (exp. EPS $3.12 for Q1) and HP Inc. (exp. EPS $0.71 for Q2) will report earnings.

Commodities

Oil

Oil prices are down today, despite the strikes, as both sides appear closer to a peace deal.

Gold

Gold eased today as the U.S.–Iran war sustains inflation concerns and keeps the prospect of interest rate hikes in focus. ECB board member Isabel Schnabel indicated yesterday that a rate hike may be needed, citing energy price pressures spilling into the broader economy, while expectations also increased for the Federal Reserve to hike rates. Higher interest rates tend to weigh on gold, as they increase the opportunity cost of holding a non-yielding asset versus interest-bearing alternatives such as bonds.