London midday: FTSE turns lower as HSBC, Prudential tank

(Sharecast News) - London stocks had fallen into the red by midday on Wednesday as Asia-focused Prudential and HSBC tumbled, while oil was off highs on hopes of a US-Iran agreement to reopen the vital Strait of Hormuz.

The FTSE 100 was down 0.4% at 10,840.69, while Brent crude was up 1.5% at $80.53 a barrel and West Texas Intermediate was 0.6% higher at $76.21, having fallen earlier after Axios reported that the US was nearing a 60-day interim deal to reopen the Strait of Hormuz without tolls.

According to Axios, citing two regional sources and a US official, the US is aiming to make an announcement on Wednesday.

It was understood the deal under discussion sets up a temporary arrangement between Oman and Iran in the Hormuz strait, which could be extended.

Russ Mould, investment director at AJ Bell, said: "There is increasing optimism about a deal to reopen the Strait of Hormuz which means Brent crude oil prices are currently bubbling around the $80 per barrel mark, well short of their recent highs."

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 and HSBC tumbled following a report that Chinese mainland tax authorities have started levying personal income tax on the returns of offshore insurance policies.

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.

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.

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

Hiscox advanced as the insurer reported an increase in first-half contract written premiums and upped its guidance for 2026 constant currency growth in the retail segment to 9%.

4Imprint shot up half-year results, while Legal & General nudged higher as it reported a jump in first-half core operating profit, highlighting a strong performance in asset management and said full-year earnings per share growth would be above guidance.