London's blue-chip index, the FTSE 100, is anticipated to experience a subdued opening on Wednesday. Futures have been wavering between a 1-2 point fall and a 5-6 point rise, following a gain of over 89 points on Tuesday to close at 10,871. This level is the highest since the Iran war began and approaches February's all-time high. The current market sentiment is being impacted by renewed tensions in the Gulf and the anticipation of the US Federal Reserve's policy decision later in the day.
Geopolitical tensions have escalated, with oil prices rebounding sharply after the US intercepted an alleged Iranian attack. Brent crude rose 3.9% to $87.36 a barrel, after falling below $83 in evening trading. This follows state media reports from Tehran indicating missile launches in response to "aggressive US actions" and the Revolutionary Guards targeting three tankers in the Strait of Hormuz. These renewed hostilities ended a pause that had seen Brent crude fall 16.5% over three sessions, its steepest three-day decline since April 2020.
Despite the geopolitical headwinds, corporate earnings have provided some positive momentum. Standard Chartered reported a record first-half performance, with pretax profit increasing 9.1% to $4.78 billion, exceeding analyst forecasts of $4.52 billion. The bank's operating income climbed 6.4% to $11.60 billion. Standard Chartered also announced a new $1 billion share buyback and raised its full-year income growth guidance. Other companies reporting today include Glencore, Greggs, Reckitt Benckiser, Mobico, Sage Group, Aberdeen, Aston Martin, Weir, St James's Place, Rathbones, and Nichols.
Investors are balancing strong corporate earnings against the backdrop of geopolitical risks and upcoming central bank decisions. The Bank of England is also set to announce its latest interest rate decision on Thursday, with expectations for the Monetary Policy Committee to hold its key rate steady at 3.75%. The FTSE 100 has climbed 3.69% over the past month and is approximately 18% higher than a year ago, reflecting a sustained rally.
