London Stocks Fall on Oil Price Uncertainty and US Inflation Fears

The London stock market is set to fall at the open on Wednesday amid conflicting messages about a potential US-Iran agreement and as investors eye a key US inflation reading.

The FTSE 100 is expected to open around 21 points lower, weighed down by uncertainty over oil prices. Brent crude briefly climbed above $90/bbl before reversing course yesterday, but has since risen back towards that level after fresh attacks on shipping renewed concerns over regional escalation.

Despite deal optimism fading, any renewed diplomatic progress could quickly pull attention back towards last week's low near $80/bbl. The US consumer price index for July will be the highlight of the day, with markets expecting a small moderation in both headline and core US CPI.

Kathleen Brooks, research director at XTB, said that a soft inflation print could restore the post-jobs rally in bonds, while Patrick Munnelly at Tickmill Group noted that a firm print would validate hawkish views. Meanwhile, Balfour Beatty reported a jump in first-half underlying profit to £139m and lifted its full-year expectations.