London shares edged lower on Wednesday as a fresh surge in oil prices and renewed Middle East tensions overshadowed positive corporate news from B&M European Value Retail and Howden Joinery. The FTSE 100 fell 21.94 points, or 0.21%, to 10,351.57, while the FTSE 250 declined 0.19% to 23,334.29, according to LSEG delayed data.
Oil rally and geopolitical jitters
Brent crude climbed 2.61% to trade near $98.50 a barrel, following reports of new U.S.-Iran strikes. Patrick Munnelly at Tickmill Group noted that traders were quick to price in renewed escalation, while fresh U.S. tariff threats could add a policy risk premium. The oil spike weighed on energy-sensitive sectors and fueled concerns over persistent inflation.
Services sector contracts
Adding to the cautious mood, the S&P Global UK services PMI dropped to 49.3 in May from 52.7 in April, falling below the 50 threshold that signals contraction. This marks the first decline in output since April 2025. Tim Moore at S&P Global Market Intelligence cited subdued demand. According to Reuters, markets now price a 90% probability that the Bank of England will hold interest rates at 3.75% on June 18.
B&M jumps on profit beat
B&M European Value Retail shares soared as much as 17%, leading the day's biggest movers. The company reported adjusted pretax profit of £284 million, down 38% year-on-year but above the £274 million analyst consensus from an LSEG poll. CEO Tjeerd Jegen described it as a difficult year with execution issues but expressed confidence in managing higher energy costs. Revenue rose 3.6% to £5.78 billion, though adjusted EBITDA fell 25.9% to £459 million, and statutory pretax profit was nearly halved. Susannah Streeter at Wealth Club saw early signs that the turnaround is gaining traction, while David Hughes at Shore Capital cautioned that the outlook remains uncertain. B&M continues to face loyalty pricing pressure from UK supermarket chains such as Tesco and Sainsbury's, which use Clubcard and Nectar discounts to retain bargain-hunting shoppers.
Howden Joinery acquires DIY Kitchens
Howden Joinery shares rose after announcing the acquisition of DIY Kitchens for £390 million. The deal comprises £292.5 million in cash and £97.5 million in Howden shares, adding a direct-to-consumer online business. CEO Andrew Livingston described DIY Kitchens as a very profitable complementary operation.
Currys appoints new CEO
Currys shares edged up after the company named Fredrik Tønnesen, currently head of its Nordics division, as group chief executive effective August 3. The Nordics unit generates about 40% of revenue. Currys last month guided for an 18% increase in annual profit, supported by a 3% rise in underlying UK and Ireland sales.
Market outlook and rate risks
The FTSE's softer tone contrasts with Tuesday's gains, when the FTSE 100 rose 0.3% and the FTSE 250 added 0.6%, lifted by miners and banks on optimism over Iran peace talks. Wednesday's move appears more like a pause than a sharp selloff. However, Bank of England's Megan Greene warned that the longer the Iran conflict persists, the higher the chance of a rate hike, as elevated energy prices could feed into wages and other costs. If oil continues to climb and tariff threats intensify, FTSE-listed global firms may prove more resilient than UK-focused retailers, builders, and banks, but the entire UK market could face reduced slack.
