London's FTSE 100 rose 0.71% Wednesday morning, extending gains that followed the Federal Reserve's first interest-rate increase in more than three years, and as attention shifted toward the Bank of England's policy decision on Thursday.
The Fed raised rates by 25 basis points to a target range of 3.75% to 4%, while signaling that only one more hike remains before a prolonged pause. The move was widely anticipated, and market reaction was measured compared with the more volatile sessions seen around recent U.S. central bank meetings.
Sterling strengthened 0.10% against the dollar to $1.3398. In continental Europe, Germany's DAX climbed 0.68% and France's CAC 40 gained 0.58%, while the Euro Stoxx 50 advanced 0.77%.
U.K. inflation edged up to 3.1%, buoyed by rising fuel costs, adding to expectations that the Bank of England will hold rates unchanged at 3.75% when it announces its decision Thursday. A 6-3 vote to maintain the current rate is the widely cited consensus among economists.
James Smith at ING noted there was "very little sign" that the ongoing energy-price shock is broadening into core inflation, a reading that supports the case for a steady hand at the BoE.
Oil prices fell, weighing on energy-sector sentiment. Brent crude dropped 2.07% to $103.64 a barrel and WTI crude lost 1.68% to $100.72. Ship-tracking data from Reuters showed traffic through the Strait of Hormuz fell sharply to just three commodity vessels on Wednesday, down from 12 the day before and well below the 10-day average of 17.
U.S. President Donald Trump told reporters the United States is "hopefully" nearing the end of its conflict with Iran, saying he has spoken directly with Tehran. The remarks came amid heightened concern over energy-supply routes in the region.
On the corporate front, Capricorn Energy agreed to revised takeover terms from Norway's DNO worth $396 million, after Norwegian rival Genel Energy withdrew its bid. DNO raised its cash offer to $5.214 a share — up from $4.224 — plus a $0.99 dividend.
Retailer Next raised its 2026-27 profit guidance by £12 million to £1.255 billion, marking its fourth upgrade of the year, after first-half profit rose 10.5% driven by hot summer weather boosting sales. Drax said it expects 2026 adjusted EBITDA to land near the top end of analyst consensus, citing strong summer operations and its acquisition of the Bluefield Solar Income Fund.
