Oil Nears $95 as US-Iran Strikes Escalate

Brent crude climbed close to $95 as US-Iran strikes intensified and Iran threatened vessels using the Strait of Hormuz. The FTSE 100 saw modest gains, supported by energy and consumer staples, while Wall Street fell sharply as tech stocks weakened. Super Micro Computer plunged after announcing a major financing plan, Oracle dropped after-hours on spending concerns, and the dollar slipped after US inflation matched forecasts.

Equities

The FTSE 100 closed 0.3% higher on Wednesday at 10,254.8, while the FTSE 250 gained 0.5%. Energy and consumer staples stocks supported the market, with oil prices rising as tensions between the United States and Iran remained elevated.

Tesco shares closed more than 2% higher on Wednesday, while Unilever also rose by over 2%, helping lift the blue-chip index. Energy stocks advanced 1.9% as higher crude prices boosted sentiment across the sector. North Sea producer EnQuest surged 27% after agreeing to acquire interests in four offshore contracts in Malaysia, strengthening its international portfolio.

WH Smith fell 16.2% on Wednesday after cutting its annual profit forecast for the second time in two months and launching an equity fundraising to strengthen its balance sheet. Water utility Pennon Group slipped 1.7% after its new chief executive warned that operational discipline needed improvement. Banking stocks also weakened, with HSBC and Standard Chartered both closing more than 1% lower as investors assessed the impact of tighter Chinese capital controls on cross-border investment activity.

In the United States, Wall Street endured a broad sell-off on Wednesday. The Dow Jones Industrial Average fell 1.9% to 49,918.78, the S&P 500 lost 1.6% to 7,266.99 and the Nasdaq Composite dropped 2.0% to 25,169.50. Technology shares remained under pressure, with the S&P 500 technology sector now 11% below its record closing high reached earlier this month.

Nvidia and Broadcom weighed heavily on the market as semiconductor stocks continued to retreat. The Philadelphia Semiconductor Index fell 3.6%, extending recent weakness across the sector.

Super Micro Computer tumbled 28% on Wednesday after announcing plans to raise $7 billion through equity and equity-linked financing to fund purchases of components for growing artificial intelligence server demand. The financing announcement prompted a sharp reassessment of the stock despite continued expansion in its AI infrastructure business.

Amazon also influenced trading after unveiling an expansion of its less-than-truckload freight services across the United States. The move pushed trucking operators lower, with XPO, J.B. Hunt and Old Dominion all declining as investors considered the potential competitive impact. After the closing bell, Oracle shares were down about 1% following the release of its latest financial results.

Forex & Commodities

The US dollar slipped on Wednesday after May inflation matched forecasts, leaving traders with little fresh reason to expect a near-term Federal Reserve rate hike. The dollar index was lower at 99.88, close to Monday’s two-month high of 100.2, after US consumer prices rose 4.2% in the 12 months to May, the fastest annual pace since April 2023.

Economists had expected the 4.2% CPI reading, and traders reduced bets on a September Fed rate hike while still pricing in a strong chance of an increase by October. A Reuters poll showed most economists expect the Federal Reserve to keep its key interest rate unchanged for the rest of 2026.

Sterling rose against the dollar on Wednesday as investors looked ahead to Friday’s UK GDP data. The pound’s exact exchange rate was not given, but the move left it firmer during the session.

The yen was steady against the dollar at 160.5 on Wednesday, staying near the 160 level closely watched for possible Japanese intervention. A Bank of Japan rate rise at its 16 June meeting is almost fully priced in, while economists expect another increase in the fourth quarter, taking borrowing costs to 1.25% by year-end.

Gold rebounded early on Thursday after touching a six-month low. Spot gold rose 0.5% to $4,096 an ounce by 0558 GMT, after earlier falling to $4,022, its lowest level since 21 November.

Oil rose sharply early on Thursday as US-Iran strikes escalated and Iran declared the Strait of Hormuz closed. Brent crude climbed to $94.58 a barrel, while WTI rose to $91.74. US crude inventories fell by 7.2 million barrels in the week to 5 June, a larger draw than expected.