UK FTSE indexes hover near three-week lows as WH Smith cuts outlook

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FTSE near lows, WH Smith outlook

Highlights

WH Smith plunges 16.4% to its lowest since 2010 after a second profit warning and equity raise, citing weakened travel spending from the Iran war.
Banks fall 1% as HSBC drops 1.9% and Standard Chartered falls 0.8%, pressured by China’s new capital controls potentially having larger-than-expected effects per J.P.Morgan.
EnQuest surges 18% after agreeing to buy up to $833 million in Malaysian offshore assets from Petronas, expanding its South East Asian footprint.

Market moves and company developments

As reported by Reuters, the FTSE 100 and FTSE 250 both inch up 0.2% by 0752 GMT, but broader sentiment remains cautious as investors assess geopolitical risks and corporate updates.

WH Smith tumbles 16.4% to its lowest level since late 2010 after cutting its annual profit forecast for the second time in two months and launching an equity raise to strengthen its finances. The travel retailer says the Iran war is disrupting global travel and weakening passenger spending, making it the biggest faller on the midcap index.

Banks are also among the main sector losers, down 1%, with HSBC and Standard Chartered falling 1.9% and 0.8% respectively. The lenders remain under pressure after Beijing unveils tighter capital controls to limit cross-border investments, while J.P.Morgan says the effect could be greater than previously anticipated.

Pennon Group slips 1.3% after its new chief executive warns that operational discipline must improve, even as the water utility returns to annual profit. In contrast, EnQuest jumps 18% after agreeing to buy interests in four offshore contracts in Malaysia for up to $833 million from state-run Petronas, extending its South East Asian presence.

Geopolitical and policy pressures on sentiment

Middle East tensions remain elevated as the U.S. and Iran trade fresh fire, although crude prices hold steady and provide some relief for investors. Markets are also watching for details of a deal to open the Strait of Hormuz that President Donald Trump says is on the horizon.

Inflation worries linked to elevated oil prices lead investors to price in a 25 basis point Bank of England rate hike by September, according to LSEG-compiled data. Later U.S. inflation figures may offer further guidance on the Federal Reserve's policy path, adding another macroeconomic test for UK equities.

WH Smith’s profit downgrade and capital raise was the focus of our earlier report, as the retailer flagged weakening passenger numbers and softer spending amid disruption to global travel. We noted that the company cut its full-year profit guidance again and announced an equity raise equal to 20% of its share capital to shore up its finances, highlighting broader pressure across travel retail tied to heightened geopolitical uncertainty.

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