British stocks moved higher on Wednesday as gains in mining and precious-metals shares helped the FTSE 100 recover from an earlier decline.
The rebound came despite fresh concerns over UK inflation, while tensions between Washington and Tehran over the Strait of Hormuz continued to support demand for oil and gold.
FTSE 100 Recovers as Miners Rally
The FTSE 100 rose 0.05% as of 09:00 ET, reversing earlier losses.
Elsewhere in Europe, Germany’s DAX slipped 0.15%, while France’s CAC 40 gained 0.31%.
Sterling also strengthened against the U.S. dollar, with the GBP/USD exchange rate climbing toward $1.3600.
Mining and precious-metals companies were among the strongest performers on the London market.
Fresnillo gained 3.1%, while Endeavour Mining advanced 3%. Anglo American rose 2.4%, and Antofagasta climbed around 3%.
UK Inflation Rises to 2.9%
UK consumer price inflation increased to 2.9% in July, up from 2.6% in June, according to the Office for National Statistics.
The increase matched economists’ expectations and marked the first acceleration in the annual inflation rate since March.
Higher energy costs were a major contributor. Gas prices surged 14.7%, representing their strongest monthly increase since October 2022.
The increase followed Ofgem’s decision to raise the household energy price cap by £221 to an annual equivalent of £1,862.
Core Inflation Remains Sticky
Core inflation remained unchanged at 2.6%, despite expectations for a slight slowdown.
Meanwhile, services inflation eased to 3.4% from 3.6%.
The ONS said the latest energy-price assessment period was the first to reflect the effects of the Middle East conflict. However, the inflationary impact remained concentrated rather than spreading broadly across the UK economy.
Food and drink inflation also continued to weaken, falling for a fourth consecutive month to 1.3%, its lowest level since August 2024.
Bank of England Rate Outlook in Focus
Capital Economics deputy chief UK economist Ruth Gregory said the latest figures suggest that underlying inflationary pressures remain relatively contained.
The firm continues to expect the Bank of England to keep interest rates at 3.75% for the remainder of 2026 before cutting them to 3.00% next year.
That outlook is considerably more dovish than current market expectations.
Jefferies strategist Mohit Kumar also pointed to softer UK employment figures as a factor that could limit expectations for further Bank of England rate hikes.
However, Capital Economics warned that higher energy costs could still push headline inflation toward 3.5% later this year.
Manufacturing data also suggest that core goods inflation could increase further as higher production costs gradually feed through to consumer prices.
Middle East Tensions Keep Markets Cautious
Geopolitical risks remained another major influence on global markets.
Iranian parliament speaker Mohammad Bagher Ghalibaf reportedly said that the Strait of Hormuz would remain closed until several Iranian demands were addressed, including the lifting of sanctions and the release of frozen assets.
Meanwhile, U.S. President Donald Trump said there were no ongoing or scheduled negotiations with Iran and maintained that the Strait of Hormuz remained open.
Reports also indicated that the U.S. administration had asked negotiators to pause discussions until Tehran was prepared to reach an agreement.
The continuing uncertainty has kept traders focused on potential disruptions to global energy supplies.
Oil Eases While Gold Extends Gains
Oil prices pulled back slightly from earlier highs.
Brent crude fell around 0.05% to $90.97 per barrel, while West Texas Intermediate declined 0.14% to approximately $83.92.
Gold remained much stronger as investors sought protection from geopolitical uncertainty.
Spot gold climbed around 2.48% to $4,436.38, while gold futures gained approximately 1.6%.
US Treasury Expands Bond Buybacks
The U.S. Treasury also announced plans to increase the size of its buyback operations for longer-dated nominal coupon securities.
The minimum size of each operation will rise to $4 billion from $2 billion, starting September 9 and continuing through the end of the current refunding quarter.
The move could influence liquidity conditions across global bond markets.
UK Corporate News: Pinewood, Ithaca Energy and Trainline
Several individual UK companies also attracted investor attention.
Pinewood Technologies agreed to a £545 million takeover by U.S. private equity firm Ridgeview. The deal offers shareholders £4.48 per share in cash, representing a 43% premium.
Smith & Nephew announced that CFO John Rogers will leave his position on September 30 to take up a role in the United States.
Meanwhile, Ithaca Energy increased its 2026 dividend guidance to between $500 million and $530 million after reporting record second-quarter production and strong cash generation.
Oxford Nanopore posted a narrower first-half loss as margins improved and adjusted EBITDA losses declined significantly.
Finally, Trainline is facing a formal investigation by the Competition and Markets Authority over whether mandatory fees were properly included in prices displayed on its app and website.
FTSE 100 Outlook Remains Tied to Inflation and Geopolitics
The FTSE 100 managed to recover as strength in mining and precious-metals stocks outweighed concerns surrounding higher UK inflation.
However, investors remain focused on the outlook for Bank of England interest rates, energy prices and Middle East tensions.
Further developments in inflation and the Strait of Hormuz could therefore remain key drivers for UK stocks, sterling, oil and gold in the coming sessions.
