British shares opened lower on Thursday as the market awaited the Bank of England's interest rate announcement, while a jump in oil prices and central bank commentary across major economies weighed on sentiment.
At 08:32 GMT the FTSE 100 was down 1.6%. The pound was slightly stronger against the dollar, with GBP/USD up 0.01% to 1.3258. Elsewhere in Europe, Germany's DAX index fell 2.03% and France's CAC 40 dropped around 1.5%.
Macro backdrop and central bank signals
Investors entered the day digesting mixed labour market data - unemployment held steady while wage growth eased to 3.9% - at the same time oil prices moved sharply higher. Brent crude climbed to roughly $114 a barrel amid renewed tensions in the Middle East, a development that lifted energy price risk and is likely to influence inflation expectations.
Federal Reserve Chair Jerome Powell reiterated a firm stance on inflation, indicating that price pressures need to moderate further before policymakers will consider cutting rates. That tone reduced expectations for a near-term policy pivot in the United States. In Asia, the Bank of Japan opted to leave rates unchanged in its latest meeting, with one member recorded as dissenting.
On the European front, the European Central Bank and the Bank of England are widely anticipated to keep interest rates on hold at their upcoming meetings, mirroring decisions previously taken by several other central banks earlier in the week. That broad pattern of policy pauses is extending across multiple jurisdictions.
Geopolitical developments
Geopolitical risk spiked after an Israeli strike on Iran's South Pars gas field, which prompted Iranian retaliatory actions aimed at energy infrastructure in Qatar and the United Arab Emirates. Iran has additionally identified energy facilities in other Gulf countries as potential future targets. Those developments have coincided with the jump in Brent prices and add an element of uncertainty to markets that are sensitive to disruptions in energy supply.
UK company updates
A number of listed UK firms published results or guidance on Thursday, providing a mixed picture across sectors.
- LSL Property Services reported an underlying operating profit for fiscal 2025 of 32.6 million, broadly in line with analyst expectations of 32.2 million, and kept its outlook for further profit growth in fiscal 2026. The property services group reported a return on capital employed of 35% and net cash of 27.8 million for the year ended 2025, and declared a total dividend of 11.4 pence per share. In January the company announced a 12 million share buyback program.
- DFS Furniture plc reiterated its full-year profit guidance of 43-50 million even as it flagged some softening in customer footfall attributed to adverse weather since the half-year point. The retailer recorded first-half revenue of 47.7 million, up 8.6% year-on-year, and pre-tax profit rose 82% to 31 million, consistent with its January update.
- SGL Carbon SE posted weak fourth-quarter results but provided adjusted EBITDA guidance for fiscal 2026 with a midpoint roughly 8% above consensus. Fourth-quarter 2025 sales were 97.3 million, down 19.3% year-on-year and about 1% below the consensus estimate of 199 million. Management attributed the decline mainly to the restructuring of the Carbon Fibers unit, which has now been completed, and ongoing weak demand in key end markets including semiconductors and automotive.
- Eurocell, the UK window and door manufacturer, said preliminary 2025 revenue rose 13% year-on-year, a rise primarily driven by its Alunet acquisition. The group reported adjusted operating profit growth of 6% for the year, while adjusted pretax profit fell 5% to 19 million due to higher finance costs.
- Central Asia Metals announced 2025 revenue of $229.90 million, ahead of the consensus figure of $224.92 million from five analysts. The base metals miner recorded a net loss for the year after taking a $117.8 million impairment charge at its Sasa mine, and reported adjusted free cash flow of $56 million and EBITDA of $101.80 million, representing a 44% EBITDA margin.
- Capital Ltd, a UK-listed mining services firm, said net profit after tax rose 318% in 2025, largely because of sizable gains in its investment portfolio. The company posted net profit of $71 million for the fiscal year while revenue declined 0.6%. Adjusted EBITDA increased 1.1% as the core business showed signs of softening.
Market implications
The combination of sticky wage dynamics, a firm central bank tone from the Fed, and a renewed risk premium on oil linked to Middle East hostilities contributed to a cautious tone across equity markets on Thursday. Energy and commodity-linked sectors may be particularly sensitive to the rise in Brent, while consumer-facing retailers and property services will be watching household income and interest rate guidance closely.
Investors will be closely watching the Bank of England's decision later in the day for any signals on the path of UK rates and the potential implications for financial conditions and corporate financing costs.