Global stock markets experienced a partial recovery on Wednesday as oil and gas prices eased, providing investors with some relief after the sharp sell-off earlier in the week, triggered by escalating conflict in the Middle East.
In London, the FTSE 100 index rose by approximately 80 points, closing 0.8% higher at 10,567.65.
This rebound came after the index had fallen nearly 3% on Tuesday due to concerns that a prolonged regional conflict could negatively impact global growth.
European markets also gained ground. Germany’s DAX climbed 1.8% by the end of the session, while France’s CAC 40 increased by 0.8%.
Across the Atlantic, trading on Wall Street began on a positive note. The S&P 500 was up 0.85%, and the Dow Jones Industrial Average rose by 0.65% by the time European markets closed.
Financial markets have been closely monitoring fluctuations in global energy prices, which surged earlier in the week amid fears of supply disruptions in the Middle East. However, prices stabilised on Wednesday.
The global oil benchmark, Brent crude, dropped about 0.5% to around $80.90 per barrel, while a key European benchmark for natural gas fell roughly 9%. Despite this pullback, both commodities remain significantly higher than their levels from the previous week.
Analysts at Cornwall Insight warned that the earlier spike in wholesale gas prices could still affect UK household bills. They stated that domestic energy costs could rise by about 10% from July. Under forecasts following the regulator’s pricing mechanism, the cap set by Ofgem could increase to around £1,801 per year for a typical dual-fuel household. However, Cornwall Insight noted that the final figure will depend on average wholesale prices over the coming three months, meaning the outcome will hinge on how long the current volatility lasts.
Shares of London-listed oil majors BP and Shell both fell around 2% as energy prices eased slightly during the day.
Russ Mould, investment director for AJ Bell, said: “The FTSE 100 and other European markets took their cue from US gains to trade firmly higher, with some of the names caught up in the heavy selling at the start of the week bouncing back from their lows.
“This presents a salutary reminder to investors caught up in the recent volatility that ups and downs are a natural feature of financial markets.
“But the waters remain choppy. Wall Street has been oscillating between healthy gains and more modest moves higher, which hints at continuing nervousness about the outlook amid what remains a fast-moving set of events in the Middle East.”
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