FTSE 100 slips as commodity stocks weigh on market

​​​Oil price weakness drags down energy giants

​The FTSE 100's 0.2% decline came despite a relatively quiet news flow, with the index snapping a three-day winning streak. The culprit was straightforward: commodity prices weakened, and the index's heavyweight oil and mining stocks followed suit.

​BP and Shell ranked among the session's biggest fallers after crude prices slid on reports that up to 50 million barrels of Venezuelan oil could flood the US market. This supply increase threatened to tip the delicate balance that had kept oil prices supported in recent weeks.

​The energy sector's sensitivity to crude price movements remains a defining feature of FTSE trading. When oil falls, the index often follows, given the outsized weighting of energy names in the benchmark.

​Precious metal miners retreat from recent gains

Gold and silver miners gave back ground as bullion prices eased despite ongoing geopolitical uncertainty. Fresnillo dropped more than 3%, while Endeavour Mining also declined, reflecting the metal's pullback from recent highs.

​The retreat in precious metals came as something of a surprise given the elevated risk backdrop. Typically, gold benefits from uncertainty, but markets don't always follow the script.

​Traders seeking exposure to gold trading faced a reminder that even safe-haven assets can experience sharp reversals when profit-taking kicks in or when the US dollar strengthens.

​Silver's decline mirrored gold's weakness, with the white metal often amplifying moves in either direction due to its smaller market size and industrial demand component.

Defensive sectors provide market support

​While commodity stocks struggled, defensive areas of the market picked up the slack. Telecoms and utilities outperformed as investors rotated into lower-risk names amid the broader market weakness.

​Vodafone led the gainers in the telecoms space, while utility names Severn Trent, United Utilities and SSE all posted solid advances. These sectors typically attract buying when uncertainty rises or when growth stocks lose momentum.

​The performance split highlighted the market's cautious mood. Rather than wholesale selling, investors simply shifted capital from cyclical areas into more stable, dividend-paying names.

​This rotation pattern has become increasingly familiar over recent months as economic data remains mixed and policy uncertainty persists both in the UK and globally.

​Mid-cap movers and corporate updates

​Beyond the blue-chip index, the FTSE 250 saw notable moves. Raspberry Pi was the session's worst performer, falling 5.5% after BlackRock increased its net short position in the stock.

​The decline took shares below their initial public offering (IPO) price, a psychological blow for a company that generated significant excitement at launch. Short interest increases often signal that sophisticated investors expect further weakness ahead.

​Defence stocks moved in the opposite direction, with Babcock and BAE Systems both gaining ground. Geopolitical tensions, including renewed focus on Venezuela and broader US foreign policy rhetoric, provided support for the sector.

​Corporate news elsewhere included Reckitt's announcement of plans to return approximately £1.6 billion to shareholders, GSK's positive late-stage trial results in hepatitis B treatment, and Topps Tiles reporting a fifth consecutive quarter of like-for-like sales growth.

​Gilt yields fall as bond markets rally

​UK government bonds rallied alongside their European counterparts, with the 30-year gilt yield dropping more than three basis points. The two-year yield fell to 3.67%, marking its lowest level since August 2024.

Sterling slipped 0.1% against the US dollar to trade below $1.35, while remaining broadly flat versus the euro. Currency moves were modest, suggesting the pound's recent stability continues despite domestic political noise.

​Global backdrop remains mixed

​The FTSE's weakness came amid a negative session for Asian equities overnight, led by Japanese stocks after China imposed export bans on dual-use goods. This escalation in trade tensions added to the cautious mood.

​US futures edged lower after Wall Street closed at record highs, with AI-related gains having driven the latest rally in American technology stocks. The question now is whether this strength can be sustained or if profit-taking looms.