FTSE 100 battles through oil rout as miners rescue London from BP and Shell

The FTSE 100 edged higher on Wednesday as gains in mining shares and lower bond yields helped London absorb a sharp pullback in energy heavyweights following another slide in oil prices.

Britain’s blue-chip index was up about 0.3% around 10,886 in later morning trade.

The move came as Brent crude fell towards $86 a barrel on renewed hopes that talks between Iran and Oman could eventually improve shipping through the Strait of Hormuz.

BP and Shell were among the main drags, while miners benefited from firmer metals prices.

Cheaper oil is a mixed blessing for the FTSE 100

The drop in crude has changed the balance inside the FTSE.

BP and Shell both fell more than 2% in early trading as Brent extended its decline for a third session.

That weighed heavily because the two companies carry significant index weight and had previously helped the FTSE outperform when oil surged.

At the same time, cheaper energy is easing one of the biggest threats to the UK and European outlook.

Lower oil reduces pressure on inflation, corporate costs and bond yields, potentially improving the backdrop for rate-sensitive sectors.

The Stoxx Europe 600 gained about 0.1%. France’s CAC 40 advanced around 0.3%, while Germany’s DAX was broadly flat to slightly lower in early dealings.

Miners and banks help cushion the oil drag

Basic resources were the strongest European sector, gaining roughly 0.9%, helping London offset the decline in energy stocks.

The FTSE 100’s large exposure to miners means movements in gold, copper and other commodities can quickly counter weakness elsewhere.

Banking shares also remain in focus after a strong run across Europe.

Citi analysts told The Wall Street Journal that the sector’s broad rally may be entering a more mature phase as valuations become less compelling, although they continue to favour names including NatWest.

Prudential and M&G were also among London stocks attracting attention with half-year results scheduled for Wednesday, adding company-specific catalysts to an otherwise macro-driven session.

Prudential enters the report with analysts broadly positive on the stock, according to TipRanks.

Nvidia and US inflation could set the next direction

The bigger global test comes later Wednesday.

Nvidia reports fiscal second-quarter earnings after Wall Street closes, with investors looking for evidence that AI infrastructure spending can continue growing quickly enough to justify elevated semiconductor valuations.

European technology shares slipped about 0.2% ahead of the results.

Saxo strategists said markets are increasingly focused not simply on whether Nvidia beats expectations, but on the size of any beat, its guidance and whether margins remain resilient as component costs rise.

US PCE inflation data are another immediate risk.

A softer reading could reinforce the decline in yields and help global equities, while stronger inflation would revive questions over another Federal Reserve rate increase.