London’s FTSE 100 index dipped on Thursday, weighed down by declines in oil stocks and profit warnings from major retail firms, underscoring how commodity and consumer sectors are influencing market direction early in 2026. Energy heavyweights such as Shell and BP saw share prices soften after oil prices displayed mixed signals amid geopolitical and supply chain uncertainty. Retailers including Associated British Foods — owner of Primark — issued lower profit forecasts, citing weaker demand in clothing and U.S. food divisions.

Consumer caution in Europe as holiday spending patterns shift contributed to muted retail performance, with some analysts warning that weaker discretionary demand could persist into the new year. Retailers emphasised the importance of balancing promotional activity and margin preservation amid competitive pressures.

Sector rotation was evident as investors moved toward defensive assets, including utilities and healthcare, in anticipation of slower growth or higher rates later in 2026. These reweightings contributed to relative outperformance in some parts of the market.

Fixed income markets showed modest moves as bond yields reflected a balancing act between growth expectations and rate-cut pricing; U.K. gilt yields were slightly softer in early trading.

Market watchers noted that future trading sessions could see increased volatility as economic data — including inflation and employment reports — begin to flow, potentially resetting market expectations for both equities and bonds.

Source: Reuters.