The UK’s FTSE 100 stabilized on Tuesday after a six-session losing streak, supported by gains in energy and healthcare companies as investors assessed renewed inflation concerns and rising global borrowing costs. The benchmark index edged higher as markets balanced stronger oil prices against signs of a slowing domestic economy and increased pressure in global bond markets.

Energy Stocks Provide Support as Oil Prices Rise

The FTSE 100 rose 0.1% to 10,728.04 points, recovering slightly after reaching a three-week closing low in the previous session. Energy companies were among the strongest contributors, with Shell gaining 1.8% and BP rising 2.7% as crude oil prices climbed back above $90 per barrel.

The move in energy stocks reflected renewed concerns over global supply risks following increased tensions between the United States and Iran. Developments surrounding the Strait of Hormuz, a critical route for global energy shipments, continued to influence oil markets and raised questions about whether higher energy costs could place additional pressure on inflation.

Bond Market Volatility Raises Inflation Concerns

Investor attention remained focused on global bond markets, where long-term borrowing costs in the United States, Japan and Germany reached their highest levels in decades. Rising yields indicate that investors are demanding greater compensation for inflation and fiscal risks, creating additional pressure across equity markets.

Higher energy prices have increased concerns that inflation could prove more persistent, potentially affecting central bank decisions. In the UK, traders continue to price in at least one 25-basis-point interest rate increase from the Bank of England by the end of the year, although recent economic data has complicated the outlook.

UK Labour Market Shows Signs of Cooling

Official data showed that Britain’s labour market weakened further during the second quarter, with private-sector wage growth slowing to its weakest pace since late 2020 and job vacancies falling to their lowest level in more than five years. The data may provide some support for a more cautious approach from the Bank of England as policymakers evaluate the balance between inflation risks and economic growth.

Separately, grocery price inflation eased to its lowest level since October 2024, offering some relief for households facing elevated living costs. However, policymakers remain focused on whether higher energy prices linked to geopolitical tensions could eventually influence wages and broader inflation trends.

Defensive Sectors Gain as Investors Manage Uncertainty

Healthcare stocks also contributed to the market’s resilience, with defensive companies attracting demand during periods of economic uncertainty. AstraZeneca rose 2.1%, while GSK gained 2%, highlighting investor preference for sectors with relatively stable demand characteristics.

Meanwhile, some internationally focused investment trusts declined as bond yields increased. Japan-focused funds were among the weaker performers after Japan’s benchmark bond yield reached a three-decade high, demonstrating how global fixed-income moves are influencing equity markets beyond regional boundaries.

Going forward, investors will continue monitoring oil price developments, UK inflation data and central bank signals for indications of the next phase in monetary policy. The interaction between energy-driven inflation pressures, bond yields and economic growth expectations will remain a key factor shaping market direction as companies and policymakers navigate a more uncertain global environment.