UK and European equities traded with a firmer tone today, with London supported by resilience in internationally exposed blue chips and energy names, while broader continental markets were steadier despite some divergence across the main benchmarks. Sentiment remained shaped by Middle East risk, oil-market volatility and expectations around central bank policy, with the European Central Bank’s latest communication reinforcing the view that inflation risks remain closely tied to energy prices and geopolitical disruption.

US markets opened higher as investors looked for a recovery after recent weakness in technology shares, helped by a rebound in growth stocks and a more constructive interpretation of wholesale inflation data. Even so, risk appetite remained fragile, with geopolitical tensions between the US and Iran continuing to influence energy prices, bond yields and defensive positioning across portfolios.

Asia-Pacific markets were mixed to firmer, with regional trading influenced by the same global themes affecting Europe and the US: elevated oil prices, geopolitical uncertainty and shifting expectations for US monetary policy. Japanese and Hong Kong equities remained key focal points for international investors, while regional risk appetite was tempered by concern that higher energy costs could weigh on corporate margins and consumer demand.

Oil remained highly sensitive to developments in the Middle East, with Brent and US crude supported by concerns over supply disruption and the strategic importance of the Strait of Hormuz. The market’s tone was volatile rather than one-directional, as traders balanced geopolitical risk premia against questions over demand resilience, but the conflict backdrop continued to keep energy markets firmly at the centre of the macro narrative.

Gold was firmer as investors maintained demand for defensive assets against a backdrop of geopolitical tension, although the scale of the move was moderated by elevated real-rate expectations and a stronger focus on inflation-sensitive central bank policy. The metal continues to trade as a hedge against political and market uncertainty, but it’s safe-haven appeal is being tested by competing pressure from yields and the US dollar.

Among UK large caps, energy shares remained closely watched as the escalation in oil market volatility fed directly into expectations for cash flow, shareholder returns and sector leadership. BP was in focus after a recent session of outperformance, reflecting the way higher crude prices can provide near term support for integrated oil producers even as the broader market assesses the risk of demand destruction and geopolitical disruption.