London's FTSE 100 edged up 0.2% in early trading on Tuesday, hovering near 10,340, as a rally in oil majors BP and Shell provided support amid Brent crude trading above $110 per barrel. However, gains were narrow, with Barclays and Taylor Wimpey weighing on sentiment, highlighting a divided market.
BP Surges on Strong Q1 Earnings
BP shares jumped after reporting a first-quarter profit of $3.2 billion, more than double the year-ago figure and the highest in over two years. The company's underlying replacement cost profit, its preferred net income metric, came in at $3.2 billion, exceeding the $2.67 billion average analyst estimate. The strong performance was driven by robust oil trading, as geopolitical tensions in the Middle East pushed energy prices higher. CEO Meg O'Neill said BP is 'heading in the right direction,' but cautioned that fuel margins and output remain vulnerable to instability in the region.
Barclays Falls on Credit Provision
Barclays shares dropped over 3% after the bank reported a first-quarter pretax profit of £2.8 billion, up from £2.7 billion a year earlier, and announced a £500 million share buyback. However, a £228 million provision linked to the collapse of Market Financial Solutions (MFS) overshadowed the results, raising concerns about lending risks in the private credit market. CEO C.S. Venkatakrishnan described the MFS charge as 'very serious,' noting it has implications for both Barclays and the broader financial sector.
Taylor Wimpey Slumps on Cost Pressures
Taylor Wimpey shares plunged 4.3% to their lowest level in nearly 13 years, as the housebuilder revised its 2026 build-cost inflation outlook from low single digits to low-to-mid single digits. The company cited fresh pressure from supply-chain surcharges and rising energy bills. As of April 26, its order book pricing was down 1% year-over-year. Quilter analyst Oli Creasey warned that Taylor Wimpey's earlier profit guidance could face increased scrutiny if market pressures persist. Rival Barratt Redrow has also scaled back land purchases as the sector retreats.
Market Divergence and Outlook
The FTSE 100's oil-driven lift masks underlying weakness in UK-focused sectors. While energy stocks benefit from elevated crude prices, builders and banks face headwinds from rising costs and credit jitters. Saxo's Neil Wilson noted that investors see 'no viable way to reopen the Strait of Hormuz,' a critical oil shipping route, supporting energy names. However, a potential breakthrough in Middle East tensions could reverse the trend, shifting focus back to credit risks and sluggish domestic demand. The FTSE 250 slipped at the open, reflecting the broader struggle among UK-centric shares.
