UK Stocks Edge Higher as Investors Weigh ECB Decision Against Middle East Tensions

London-listed stocks edged higher on Thursday, with investor focus split between a widely anticipated interest rate decision from the European Central Bank and escalating geopolitical tensions in the Persian Gulf that are bolstering oil prices.

As of 3:18 AM ET, the UK's benchmark FTSE 100 index was up 0.06%. Elsewhere in Europe, Germany's DAX gained 0.12% and France's CAC 40 rose 0.30%.

Geopolitical Tensions Support Oil

A cautious mood prevailed across markets amid reports of heightened conflict between the United States and Iran. Iranian state media reported missile strikes near several locations along its southern coast on Thursday. The developments follow a reported Iranian ballistic missile attack on Wednesday against Jordan's Al Azraq air base, which damaged several U.S. military aircraft, according to CBS News.

Iran's Islamic Revolutionary Guard Corps stated the attack was in retaliation for the U.S. sinking five Iranian oil tankers on Tuesday. The escalating conflict is directly impacting a critical global oil chokepoint. Preliminary ship-tracking data cited by Reuters showed the number of vessels passing through the Strait of Hormuz fell to seven on Wednesday from 12 the prior day, well below the 10-day average of 14.

Analysts at ING noted that current signals "point to further escalation, and upward pressure on oil prices remains strong." Brent crude futures hovered near $101 per barrel, while West Texas Intermediate traded around $96 per barrel.

ECB Rate Hike Looms

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Investors are also positioned ahead of the European Central Bank's monetary policy announcement later in the day. Market consensus has almost fully priced in a 25-basis-point interest rate hike for all three of the ECB's key benchmarks.

This expected move to tighten monetary policy comes as central banks globally continue to navigate persistent inflationary pressures. The decision will be closely watched for its implications on regional economic growth and currency markets.

Corporate Movers

In UK company news, several firms reported significant updates:

• Associated British Foods (ABF.L) announced that its Primark fashion chain will launch a home delivery service in the UK. However, the company also projected a 3% decline in like-for-like sales for the fourth quarter.
• Currys (CURY.L) reported a 7% rise in first-quarter like-for-like sales, crediting strong demand for cooling products during a summer heatwave and growth in its Nordics business.
• THG Plc (THG.L) said its first-half adjusted EBITDA more than doubled to £42.8 million. The e-commerce group warned, however, that new EU parcel tariffs would slow its revenue growth to approximately 2% in the third quarter.