Middle East Conflict Weighs Heavily on Energy Stocks Amid Defence Sector Resilience

The Middle East conflict weighed heavily on energy stocks this week, causing oil prices to drop after an initial rally. Shell and BP both fell from their highs, while Hunting PLC slumped after cutting its full-year guidance due to tendering delays caused by the conflict.

However, defence companies like BAE Systems fared better despite the geopolitical uncertainty. This is because defence primes operate on long-cycle government procurement programmes that are actually boosted by sustained instability rather than dampened by it.

The precious metals market was also affected by the risk-sensitive themes shaping this week's headlines. Silver surged, outpacing gold and copper, which hit a fresh record. The FTSE 100 finished the week higher on the back of mining leadership, helped by data showing UK private sector activity accelerated over the latest monthly reading.