FX.co ★ FTSE 100 Slips as Oil, Yields Rise

London’s FTSE 100 slipped 0.4% to trade near the 10,500 mark on Wednesday, pressured by a rebound in oil prices, rising bond yields, and a stronger dollar amid escalating geopolitical and inflation concerns. Brent crude pushed back above $100 a barrel after Iran stepped up attacks on shipping in the Strait of Hormuz, reinforcing expectations that major central banks may have to tighten policy further.

UK interest rate swaps are now pricing in more than 100 basis points of additional Bank of England hikes by the end of next year, while expectations for further tightening by the ECB and the Federal Reserve also moved higher. Caution is likely to prevail ahead of the release of the Federal Reserve’s meeting minutes later today.

At the stock-specific level, Shell inched higher after its third-quarter trading update signaled strong expected performance from its energy trading arm amid the Iran-related tensions. The company projected higher gas production but trimmed its outlook for refinery utilization and LNG liquefaction volumes.