The FTSE 100 moved higher as investors responded to rising geopolitical tension and its impact on energy markets, while positioning cautiously ahead of the Bank of England’s interest rate decision.
Stronger oil prices were a key driver. Renewed focus on security in the Strait of Hormuz, a critical route for global energy supply, has reinforced expectations of tighter supply conditions. This has provided direct support to the index, given its weighting towards oil and gas majors. Investors are increasingly factoring in the potential for sustained pricing strength if disruption risks persist, improving near-term earnings visibility for these companies.
The move highlights how external factors continue to shape UK equities. Political pressure to safeguard energy infrastructure has effectively added a risk premium to commodities, which feeds through quickly to FTSE 100 performance.
Attention is also firmly on the Bank of England. The upcoming policy decision is acting as a constraint on broader risk appetite, with investors weighing whether interest rates will remain elevated for longer. This uncertainty is limiting more aggressive positioning, particularly in rate-sensitive sectors such as financials and domestic cyclicals.
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