London, May 18, 2026, 18:01 BST
- FTSE 100 ended 1.3% higher at 10,323.8. The FTSE 250 slipped.
- Energy stocks were up as crude oil gained on worries over supply from the Iran war.
- Uncertainty in UK politics and ongoing inflation concerns are still weighing on domestic stocks.
FTSE 100 ended up strong on Monday, lifted by oil stocks. The blue-chip index outperformed as UK-focused midcaps trailed, hurt by concerns over inflation and Prime Minister Keir Starmer’s prospects.
FTSE 100 climbs, FTSE 250 slips The FTSE 100 closed up 1.3% at 10,323.8. The FTSE 250 dropped 0.07%, paring back after falling as much as 0.7% earlier. The FTSE 250 tracks medium-sized London stocks more tied to the UK economy.
The split is important as London’s market is pulling in two directions. Global earners and oil stocks are being lifted by higher commodity prices. But local stocks continue to get hit by higher living costs, tighter policy, and political worries.
Shell and BP led UK oil stocks higher on Monday. Shares in Shell added 2.97% to £32.90, while BP was up 2.70% at £5.67. Both names beat the FTSE 100’s move.
Oil prices moved up, with Brent climbing as traders tracked supply worries linked to the Iran war. Reports surfaced about a potential short-term waiver on Iranian crude sanctions, but supply concerns stayed in focus. Reuters said disruption continues in the Strait of Hormuz, a route for about 20% of global oil supply.
Banks gained after the UK announced changes to ring-fencing rules, which were meant to split retail banks from riskier units like investment banking. The finance ministry said the move could unlock as much as 80 billion pounds in extra business loans. But John Cronin, financials analyst at SeaPoint Insights, said “timidity prevailed.” Reuters
Homebuilders slipped. The group traded lower even though Rightmove said asking prices on UK homes climbed 1.2% in May, which is more than is typical for May. “Market activity was staying fairly steady,” said Colleen Babcock at Rightmove, but sales agreed were still 4% below levels from a year ago, the data showed. Reuters
Politics weighed on the domestic market. Labour leader Starmer is facing internal criticism after local election losses but said he is staying on the job. Labour’s setback has rattled some investors and sent government borrowing costs higher, according to Reuters.
James Smith, developed markets economist at ING, said the political centre of gravity looks set to move left and there is “pressure to adapt the fiscal rules.” That’s what equity investors are watching. More borrowing might keep gilt yields higher and push up government bond interest rates, making funding more expensive in the economy. Reuters
London moved differently from the rest of Europe. The STOXX 600 index dropped 0.5% earlier as luxury and auto stocks fell. Michele Morganti, equity strategist at Generali Investments, said he stayed “neutral on European equities” because of earnings and energy risks against the U.S. Reuters
Oil’s rally has powered the FTSE 100, but that could turn into trouble. If crude prices keep rising, Shell and BP might gain, but inflation could climb, interest rates might stay up longer, and retailers, housebuilders and other UK-focused shares could get hit. If oil prices drop, the FTSE 100’s edge from its energy names could disappear fast.
So far, traders went with the global, commodity-heavy stocks and stayed cautious on UK consumer names. That lifted the FTSE 100. The FTSE 250 lagged.
