London close: FTSE nudges higher as Next surges, Asia-focused banks tumble

(Sharecast News) - London stocks ended just a smidgen higher on Wednesday, held back by heavy losses for Asia-focused banks Prudential, HSBC and Standard Chartered, while Next shot higher after the retailer lifted guidance again.

The FTSE 100 closed up 0.1% at 10,888.30, while Brent crude was up 0.6% at $79.82 a barrel and West Texas Intermediate was down 0.1% at $75.72, following a report the US is nearing a 60-day interim deal to reopen the Strait of Hormuz without tolls.

According to Axios, the deal under discussion sets up a temporary arrangement between Oman and Iran in the Hormuz strait, which could be extended.

On home shores, a survey showed the services sector returned to growth in July.

The headline seasonally-adjusted S&P Global services PMI business activity index rose to 52.1 from 48.8 in June, coming in above the 50.0 mark that separates contraction from expansion for the first time in three months.

It was the highest reading since April, but still below its long-run average of 54.2.

The survey showed a marginal rise in total new business received by service sector companies, which ended a four-month period of decline. However, the rate of expansion was softer than seen on average in the first quarter of 2026.

Backlogs of work continued to fall, while input price inflation slowed for the third consecutive month to its lowest since February. This was helped by reduced fuel bills in July.

Tim Moore, economics director at S&P Global Market Intelligence, said: "UK service providers moved back into growth mode during July as greater consumer spending and strong demand for technology services helped to boost overall business activity.

"More supportive market conditions meant that new work picked up for the first time in five months, although the rate of expansion was still sluggish in comparison to historic trends. Many firms cited geopolitical uncertainties and the Middle East conflict as factors limiting their growth trajectory, despite some signs of easing risk aversion among clients.

"A rebound in both activity and new business could not prevent a further decline in staffing numbers, with job losses seen for the twenty-second consecutive month The current duration of falling employment is a joint-record in 30 years of data collection, now equalling those seen during the global financial crisis and in the wake of the dotcom bubble.

"On a positive note, business activity expectations picked for the second month running and reached the highest level since February. Stronger growth projections for the year ahead partly reflected hopes of de-escalating Middle East tensions and recent signs of easing inflationary pressures."

In equity markets, Prudential, HSBC and Standard Chartered all tumbled following a report that Chinese mainland tax authorities have started levying personal income tax on the returns of offshore insurance policies.

Tax lawyers and insurance insiders told Caixin that early enforcement cases in Beijing and Hangzhou show authorities applying a 20% tax rate to returns from Hong Kong policies. The levies target dividend payouts and interest earned on prepaid premiums.

Danni Hewson, head of financial analysis at AJ Bell, said: "The fear among investors is that this could reduce the attraction of Hong Kong insurance products for wealthy customers on the Chinese mainland. This is also linked to concerns it could indicate a direction of travel towards tighter scrutiny and regulation of offshore investment flows across the board."

On the upside, retailer Next surged to the top of the FTSE 100 as it lifted profit guidance for the second time this year after second-quarter full-price sales smashed estimates due to the hotter summer and the release of pentup demand in the Middle East and Northern Europe.

The retailer said it now expects pretax profit of £1.24bn for 2026/27, an increase of £25m from its prior forecast. The latest increase reflects the benefit of £70m in additional fullprice sales during Q2, which added £15m of profit, alongside a £10m uplift from strongerthanexpected returns on its equity investments.

Glencore was in the black after it posted a rise in half-year earnings, mainly thanks to firmer commodity prices. Antofagasta and Anglo American also gained.

CocaCola HBC rallied as it lifted its fullyear guidance after delivering a strong first half, with operating profit rising sharply on the back of broadbased volume growth and improved margins.

Bodycote rocketed to the top of the FTSE 250 after announcing takeover offers from CVC and Veritas Capital, while 4Imprint rose after half-year results.