The FTSE 100’s recent rally came to a halt on Thursday, dragged down by a sharp reversal for British Gas owner Centrica as global markets absorbed escalating tensions in the Middle East and shifting signals from central bankers.
London’s blue-chip index closed down 59.14 points, or 0.6%, at 10,627.04, snapping a winning streak that had been supported by a weaker pound and expectations of imminent Bank of England rate cuts. The domestically-focused FTSE 250 also fell, ending 0.5% lower, while the AIM All-Share dipped 0.1%. The decline was echoed in Europe, where Paris’s Cac 40 closed down 0.4% and Frankfurt’s Dax 40 lost 0.9%.
Geopolitical Fears Fuel Oil and Gold
The spectre of conflict provided a stark counterpoint to corporate news. Fears around potential US military action against Iran intensified, with President Donald Trump warning Tehran it had roughly ten days to strike a “meaningful” deal or face consequences. The situation was further complicated by reports of joint Iranian-Russian military exercises near the critical Strait of Hormuz, a key chokepoint for global oil supplies.
This geopolitical uncertainty injected a significant risk premium into commodity markets. Brent crude surged, trading above $71 a barrel from under $70 late on Wednesday. The rising tide lifted the shares of oil majors, with BP climbing 2.0% and Shell adding 0.5%, which helped cushion the FTSE 100’s broader fall. Safe-haven gold also held near record levels, with spot prices hovering around $5,004 an ounce.
Centrica Pivots from Buybacks to Nuclear Power
The day’s most dramatic move, however, was a strategic shift from one of the index’s heavyweight constituents. Centrica shares plunged 4.7% after the company announced it was pausing its share buyback programme to direct capital towards major infrastructure investments, including the Sizewell C nuclear power station and the Grain LNG terminal.
The pivot follows the completion in January of a £2 billion buyback programme that has seen the firm repurchase a quarter of its share capital since late 2022. In 2025 alone, Centrica returned £1.1 billion to shareholders, including £800 million via buybacks. The company stated the pause was because investment “offers an opportunity to create more value for shareholders at this juncture.”
The decision came alongside full-year results that showed the company navigating a return to more normalised energy markets. Centrica reported adjusted earnings before interest, tax, depreciation and amortisation of £1.42 billion for 2025, a 39% decrease from £2.31 billion the previous year. It swung to an attributable loss of £72 million from a £1.33 billion profit in 2024, on revenue that dipped 2.1% to £19.49 billion. Despite the profit drop, the company increased its full-year dividend per share by 22% to 5.5p.
Analysts focused on the group’s guidance for the coming year, which some viewed as cautious. UBS analysts said guidance for 2026 “appears weak,” noting that the centre of the EBITDA range for its new retail and optimisation segments is £900 million, below their estimate of £977 million. Berenberg also noted the firm was guiding for a lower 2026, with improvements anticipated longer term. The company is targeting £1.7 billion in EBITDA by the end of 2028, growing to £2.0 billion in 2030.
“Centrica is hitting pause on buybacks so it can allocate spending to growth projects including the Sizewell C nuclear power station,” said AJ Bell analyst Dan Coatsworth. “Executing on these ventures will be challenging and will put a dent in the company’s healthy cash position but could deliver more stable earnings if they ultimately prove successful.”
Broader Market Moves and Central Bank Watch
Elsewhere on the London market, packaging group Mondi climbed 1.2% even as it slashed its dividend in response to a “prolonged cyclical downturn.” The company chopped its final payout, leading to a total 2025 dividend of 28.25 euro cents, down from 70 cents in 2024, as pre-tax profit fell 29% to 269 million euros.
On the FTSE 250, Raspberry Pi retreated 6.9%, though it remained up 36% over the past week after speculation that AI agents could drive demand for its computers. On AIM, shares in security scanner firm Thruvision Group jumped 20% after it secured new contracts at UK custodial facilities worth £500,000.
The pound slumped to $1.3455, a factor that StoneX analyst Fawad Razaqzada suggested would continue to support investor interest in UK equities alongside expectations of Bank of England rate cuts. “The [FTSE 100] index fell back as investors digest a number of earnings results. But the downside could prove to be short-lived,” he said.
Across the Atlantic, a more hawkish tone from the US Federal Reserve provided a sobering backdrop. Minutes from its latest meeting revealed several policymakers believe the central bank should not rule out further interest rate hikes if inflation remains stubbornly above target. This discussion marks a departure from market expectations of imminent rate cuts. US stock indices were lower in Thursday trading, with the Dow Jones Industrial Average down 0.5%.
The yield on the benchmark US 10-year Treasury was unchanged at 4.08%, while the 30-year yield widened slightly to 4.71%.
Among the FTSE 100’s other notable movers, British American Tobacco, Relx, and BAE Systems were the biggest risers. The biggest fallers alongside Centrica were Barclays, Rio Tinto, and easyJet.
