British shares moved lower on Wednesday as renewed military activity between the United States and Iran fed risk aversion and lifted crude oil prices, while disappointing economic data from China compounded caution among investors.
The FTSE 100 was down 0.60% as of 03:18 ET (07:18 GMT). Germany's DAX fell 0.90% and France's CAC 40 lost 0.28%. Sterling appreciated 0.17% to $1.3414.
China's National Bureau of Statistics reported second-quarter GDP growth of 4.3% year-on-year, the slowest pace since the final quarter of 2022. The print missed a Reuters poll forecast of 4.5% and slowed from 5% growth in the first quarter. It also came in below Beijing's stated full-year target range of 4.5% to 5%. The data showed investment weakening further and household consumption remaining subdued.
Because China is the largest export market for the mining sector, the softer growth outlook is notable for miners, which represent a significant portion of the FTSE 100's market capitalisation.
The heightened geopolitical backdrop coincided with a fourth straight night of U.S. military strikes on Iranian targets. U.S. Central Command said its forces struck Iranian military sites near the Strait of Hormuz on Tuesday, hitting missile and drone locations, naval infrastructure and coastal defence systems in an operation lasting seven hours. The command also confirmed that a naval blockade on vessels transiting Iranian ports had been reintroduced on the same day, supported by more than 20 U.S. warships and hundreds of military aircraft deployed across the region.
In a televised interview, U.S. President Donald Trump said the campaign would intensify further and warned that Iranian power plants and bridges would be targeted "next week" unless Tehran returned to the negotiating table.
Iran's health ministry reported that more than 260 people were injured during the latest U.S. strikes. Iran's Revolutionary Guard Corps said it struck U.S. military assets in Bahrain and Kuwait in retaliation. Jordan's army reported intercepting three ballistic missiles fired from Iranian territory.
The UAE Ministry of Defence confirmed two UAE-flagged tankers, the Mombasa and the Bahiyah, were struck by Iranian cruise missiles while transiting the strait's southern passage. India's government reported one Indian seafarer among the combined crew of the vessels died and several others were injured.
Separately, the U.S. Treasury Department imposed sanctions on more than 50 individuals, companies and vessels it said were linked to an alleged Iranian oil-smuggling network. Treasury Secretary Scott Bessent said the measures were aimed at disrupting what the department described as a critical monetary lifeline for the Iranian administration.
Energy prices moved higher amid the geopolitical developments and market repricing. Brent crude rose 1.4% to $85.90 a barrel and U.S. WTI crude gained 1.2% to $80.32. Related benchmarks showed gains in oil contract indicators recorded in the market data for the session.
Precious metals were mixed: a broader gold measure was down 0.85% to $4,034.40 an ounce, while spot gold fell 0.60% to $4,029.69 an ounce.
UK corporate updates
- B&M said first-quarter group revenue increased 2%, with strong performance in France and from Heron Foods offsetting weaker like-for-like sales in the core UK business.
- Barratt Redrow reported fiscal 2026 home completions at the upper end of guidance and unveiled a £400 million share buyback for fiscal 2027.
- Thames Water said it has sufficient funding through the fourth quarter of 2026 and continues to work on a recapitalisation plan with creditors, regulators and the government.
- Rio Tinto reported first-half copper equivalent production rose 3% year-on-year and said it is maintaining full-year production guidance across key commodities.
- Antofagasta said first-half copper production fell 9.5% year-on-year due to lower output at key mines but maintained its full-year production forecast.
- Hunting maintained full-year EBITDA guidance after first-half trading met expectations, supported by strong demand in subsea and perforating businesses.
- ICG reported a 10% year-on-year increase in fee-earning assets under management, driven by robust fundraising for its flagship European structured capital fund.
The market reaction reflects a blend of geopolitics and macroeconomic data. The U.S.-Iran military exchanges are directly influencing energy supply risk perceptions, while China’s unexpectedly weak growth figure is tempering demand expectations for commodities. Together these forces contributed to losses across major European equity benchmarks and selective moves in stocks tied to energy, mining and utilities.
Investors will likely monitor subsequent Chinese data releases and any further developments in the Gulf for guidance on commodity prices and risk appetite in equities.