London's FTSE 100 closed 0.99% higher on Wednesday as investors digested a faster-than-expected decline in inflation and earnings updates from corporate heavyweights.
"The larger fall in CPI inflation than forecasters expected, from 3.3% yoy in March to 2.8% yoy in April (consensus and Berenberg: 3.0%) suggests that inflation would have dropped to within a hair's breadth of the Bank of England's (BoE's) 2% target without the Iran war," Berenberg said. "In the months ahead, the upward pressure on prices from the Iran war will spread from petrol and diesel to goods and food and likely lift inflation to over 3.5% in H2. Nonetheless, if the services prices that the BoE can influence most continue to behave, the central bank need not raise interest rates in response."
Meanwhile, Wood Mackenzie's Horizons report said a prolonged shutdown of the Strait of Hormuz would represent the most significant threat to global energy markets in decades. "The Strait of Hormuz is the most critical chokepoint in global energy markets, and a prolonged closure would become far more than an energy crisis," said Peter Martin, head of economics at Wood Mackenzie.
In corporate news, British retailer Marks and Spencer Group (MKS.L) rose 6.64% to top the blue-chip index after profit attributable to owners of the parent for fiscal 2026 declined to 259.4 million pounds sterling from 295.7 million pounds year over year, while revenue jumped to 17.27 billion pounds from 13.82 billion pounds earlier.
"M&S has released its FY26 results this morning with FY26 Food profits ahead of expectations, but Fashion, Home & Beauty below. We think Food is likely to have continued its momentum into FY27 so far, but store clothing sales have been somewhat weather impacted and are likely to be seeing a more volatile trend. As such we view the results as more of a positive read for the UK grocers and NEXT (online) than Primark," RBC Capital Markets said.
On the flip side, Experian (EXPN.L) dropped 2.95% to become the worst performer on the FTSE 100 even as profit and revenue for fiscal 2026 increased year over year. The data and technology company also commenced a program to repurchase up to $1 billion of shares.
"FY26 demonstrated robust execution with 11% constant [currency] growth and 8% organic growth including 9% in Q4. Benchmark margins increased 60 [basis points] - ahead of the medium term framework and driving 13% constant fx EPS growth. Growth was stable across the quarters and broad based across geographies and verticals," BofA Global Research said.