UK Market Breakdown: Hormuz Oil Stalls FTSE 100, Week of 10 August 2026

London's blue chips spent the first three sessions of this week going backwards, and the reason was sitting in the Strait of Hormuz. The FTSE 100 closed lower on Monday, Tuesday and Wednesday, finishing at 10,833.15 — around 0.6% below Friday's close of 10,901.09 — as Brent crude climbed from just over $83 a barrel to touch $90 and pushed inflation worries back into UK rate expectations.

It was not a rout. Two of the three declines were a fifth of a percent or less, and the mid-cap FTSE 250 gained ground on both Tuesday and Wednesday. But the composition of the move was telling: oil majors up, insurers and retailers down, and a run of broker downgrades doing more damage to individual share prices than the macro backdrop did to the index.

The week's standout was Balfour Beatty, which lifted its full-year profit and cash guidance on Wednesday and sent its shares to an all-time high. At the other end, Imperial Brands, Spirax Group and Legal & General each shed more than 3% in a single session on company-specific news.

The FTSE 100

Monday set the tone. The index closed down 38.59 points, or 0.35%, at 10,862.50, snapping a four-week winning streak, after Iran's Revolutionary Guards said the Strait of Hormuz would remain shut unless Washington lifted sanctions, paid reparations and met a series of other conditions. Brent jumped close to 4% to around $86.74, with West Texas Intermediate up 3.9% at $81.22. Energy stocks firmed about 1%, but a retreat in precious metal miners and a firmer pound left the index lower overall.

Tuesday brought more of the same. The FTSE 100 ended down 18.31 points, or 0.2%, at 10,844.19, with Brent touching $90 a barrel early in the session after President Trump said he had instructed US negotiators to include Iranian compensation demands in any future talks. BP rose 2.2% and Shell 1.8% on the crude move, but that was not enough to offset an insurance sector in retreat — the FTSE 350 insurance index fell 2.6% — and a heavy fall in Spirax Group after its half-year results.

Wednesday was the quietest of the three. The index bobbled either side of the gain line and closed 0.1% lower at 10,833.15, a third consecutive decline, with volumes thin ahead of the US inflation print. Housebuilders including Barratt Redrow and Vistry were among the risers alongside miners such as Fresnillo, while Rolls-Royce and BAE Systems also gained. Retailers dragged: Burberry fell 4.2%, Marks & Spencer 4.0%, Tesco 2.0% and Next 1.6%, with JD Sports Fashion also among the fallers.

The FTSE 250 and mid caps

The mid-cap index had the better week of the two. It slipped 0.4% to 24,744.54 on Monday, giving back the record closing high it had set the previous Friday, then recovered 55.21 points, or 0.2%, to 24,799.75 on Tuesday and added a further 0.1% to 24,814.88 on Wednesday. At one point on Wednesday it was up 0.5% at 24,916.12 and on course for a fresh record close before fading through the afternoon.

AIM was the quiet outperformer. The AIM All-Share rose in all three sessions — up 0.1% at 796.38 on Monday, 0.4% at 799.57 on Tuesday and 0.6% at 803.93 on Wednesday — a gain of close to 1% across the three closes, comfortably ahead of both the FTSE 100 and the FTSE 250 over the same stretch.

The junior market's biggest individual story came on Tuesday, when Shoe Zone jumped 23% to 75p. The value footwear retailer said trading had continued positively through July, with cash and equivalents running roughly £7m ahead of its original budget as at 25 July, and launched a £3.47m share buyback. Elsewhere on AIM, Thruvision said on Monday that its principal regional partner in Asia had won a £3m contract to deploy its scanning technology across multiple major airports in South-East Asia.

The week's biggest movers

Balfour Beatty was the week's clearest winner. The construction group's half-year statement on Wednesday reported revenue of £5.56bn and underlying profit from its earnings-based businesses up 42% at £153m, and it raised guidance for full-year profit-from-operations growth to low double digits from high single digits. It also lifted its average net cash guidance to £1.5bn–£1.7bn from £1.3bn–£1.5bn. The shares rose as much as 12% to an all-time high of 973p before closing 7.1% up.

Spirax Group was Tuesday's biggest FTSE 100 faller, down 425.00p at 7,225.00p, a 5.6% drop, having been off as much as 10% intraday. Group revenue rose 5% to £863.8m with growth in all three divisions, but the company reiterated rather than upgraded its full-year guidance for mid-single-digit organic revenue growth, and investors focused on softer cash conversion and leverage slightly above target.

Imperial Brands was Monday's worst blue-chip performer, down 127.0p at 2,664.0p, after Bloomberg News reported the group was preparing to cut thousands of jobs across the US and Europe, with staff at its US subsidiary ITG Brands due to be notified from 19 August. British American Tobacco fell 4.4% in sympathy.

Legal & General ended Tuesday down 9.60p at 301.60p after UBS and Goldman Sachs both moved to 'sell' from 'neutral' — a day after Citigroup had done the same. M&G fell 3.3% on a UBS downgrade, Prudential lost 2.9% and Admiral shed 2.1%.

Company news in focus

Broker research did most of the heavy lifting this week. UBS cut Legal & General to 'sell', citing peak valuations, lower margins in its pension risk transfer business and a falling solvency ratio, while raising its price target to 280p from 260p; Goldman Sachs cut the stock the same morning and Citigroup had already done so the day before.

On Wednesday, Shore Capital ended a buy recommendation on Tesco that it had held since March 2023. Clive Black and Darren Shirley moved to 'hold' and trimmed their target price to 480p from 525p, leaving earnings forecasts unchanged and framing the call as one about valuation and momentum rather than trading. The shares were down 2.6% at 449.7p in late morning, valuing the grocer at roughly £28bn, and closed 2.0% lower.

The same session brought two more ratings moves. Deutsche Bank cut Bunzl to 'hold' from 'buy' with a 3,000p target, and the shares fell 40p to 2,766p. UBS went the other way on Admiral, keeping a buy stance and lifting its target to 4,300p after the previous week's interim results showed a stronger-than-expected underwriting margin, with the shares adding 80p to 3,800p.

In deals, the contested bid for Pharos Energy took a turn on Monday when Serica Energy said it would not raise its recommended cash offer, declaring the terms of 32.6683p per share — valuing Pharos at about £145.7m — final, days after Israel's Ratio Petroleum tabled a higher proposal. Under UK takeover rules Serica can now only revise those terms in narrowly defined circumstances. Pharos shares fell on the news.

Earnings and trading updates

The reporting calendar was light by the standards of late July, but what arrived moved share prices sharply in both directions.

Spirax Group's half-year results on Tuesday were the clearest example of a good set of numbers landing badly. Revenue rose 5% to £863.8m, with Electric Thermal Solutions up 11%, Watson-Marlow Fluid Technology Solutions up 7% and Steam Thermal Solutions up 1%, and the group said it was on track for both its annual guidance and its medium-term targets. Because that guidance was held rather than raised, the shares fell as much as 10% before settling 5.6% lower.

Balfour Beatty's Wednesday statement did the opposite. UK Construction held its margins and US Construction returned to profit on strong demand in the buildings market, and the guidance upgrade on both profit and average net cash was enough to take the shares to a record.

Shoe Zone's July trading update was the standout among the smaller names. The AIM-listed retailer said business had continued positively through the month with cash running around £7m ahead of budget at 25 July, and paired that with a £3.47m buyback — a combination that added almost a quarter to the share price in a single morning.

Macro and the Bank of England

Rates policy sat in the background all week. The Bank of England left Bank Rate at 3.75% on 30 July, its fifth consecutive hold, on a 6-3 vote in which Huw Pill, Megan Greene and Catherine Mann all voted for an increase to 4% — a split read as a hawkish hold. The next decision is due on 17 September. UK CPI stood at 2.6% in June, down from 2.8% in May and the lowest reading since March 2025, but the Bank's own projections point to inflation a little under 3% in the third quarter and a little over 3.25% in the fourth.

That is why the oil move mattered. With Brent back near $90, the ten-year gilt yield rose to 4.98% on Tuesday, up two basis points on the session, and by Tuesday markets were pricing a 52% chance of a Federal Reserve hike in September, up from 44% the previous Friday. Wednesday's US CPI print took some heat out of that: prices rose 3.4% in the year to July, easing from 3.5% and matching expectations, with the monthly figure at 0.1%.

On the domestic economy, the British Retail Consortium reported on Tuesday that total retail sales grew 1.3% year on year in July, slowing from 1.9% in June. England's run to the World Cup semi-finals lifted food and pub spending and hot weather helped clothing, but shoppers stayed cautious on larger purchases.

Still to come

Thursday's growth figures are the main UK scheduled event in what is left of this week, and the data calendar thickens considerably from Tuesday next week.

Rob Wood, chief UK economist at Pantheon Macroeconomics, has said the Q2 numbers should show that "the big picture is that the economy has remained resilient to the hit from the war in Iran". Beyond the data, the Hormuz negotiations remain the single biggest swing factor for London, given how directly the crude price is now feeding into both the index heavyweights and the gilt market.

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