Must read: oil price, Balfour Beatty, US inflation

Global markets

European markets have opened lower with the FTSE 100 down around 0.8%. Legal & General is at the bottom of the basket after publishing full-year results. 

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

The oil market is relatively subdued so far, staging modest gains, with Brent crude trading just shy of $90 a barrel. Oil plunged on Tuesday after Trump said the war could be over soon and the International Energy Agency suggested releasing historically large reserves of oil. That followed Monday's oil price surge, with Brent breaking above $100 to nearly $120 a barrel. Even after Tuesday’s declines, Brent crude is still up around 45% so far this year, reflecting the Iran war and existing geopolitical uncertainty.

It was a mixed session overnight in Asia with the Nikkei up 1.4% but the Nifty 50  down 1.3%. US futures are pointing to a slightly higher open after a flat close on Wall Street last night.

Balfour Beatty

Balfour Beatty (LSE:BBY) reported underlying profit up 16% to £293 million in 2025 and issued a strong outlook for 2026. It is also returning cash to shareholders via a £200 million share buyback programme and a 12% dividend hike. 

The recent hard asset renaissance or ‘HALO trade’ - heavy assets, low obsolescence - has benefitted Balfour Beatty. Investors have been diversifying beyond, or rotating away from the longstanding outperforming tech sector as well as businesses that are at risk of heavy AI disruption, towards sectors like construction. 

Although not a pure defence stock, Balfour Beatty has also got a boost from the sharp increase in government defence budgets, with the company playing a notable role in the considerable expansion in military infrastructure.  

• Buying British: dividends, defence and diversification
• Stockwatch: why I like these two renewable infrastructure funds

Shares in Balfour Beatty have surged around 7%, having touched an all-time high, lifting its year-to-date performance into positive territory. Over the longer term, the group has been a good stock to own, gaining 75% over the past year and 50% over a nine-month period. It is not cheap, with a price/earnings (PE) ratio of 19.4, higher than historic averages, but this reflects investor optimism towards its strong fundamentals and the potential for further share price appreciation.

US CPI preview

US CPI is expected to hit 2.5% year-on-year and 0.3% month-on-month in February. Upward pressure from Trump’s tariffs and rising oil and gasoline prices are likely to have stalled US inflation’s downward trajectory. 

Although it won’t be captured in today’s data, investors are very mindful of the fact that the unforeseen geopolitical crisis in the Middle East since 28 February, has drastically reshaped the narrative around inflation and interest rates, with expectations for both ramping higher. 

• Scottish Mortgage on SpaceX and running winners vs taking profits
• What would a longer war in the Middle East mean for investors?

Soaring global energy prices have pushed up the cost to Americans of filling up a tank with gasoline, hurting consumers across the income spectrum, creating cost-of-living pressures at a crucial time for Trump’s popularity in the run up to the mid-term elections later this year. 

The Iran war has also pushed out the market’s expectations for the timing of the next Federal Reserve rate cut, and a stronger-than-expected CPI print later today could further support the higher-for-longer interest rate outlook. This is likely to add to recent upward pressure on the US dollar and as investors flock to safe haven assets amid the geopolitical turmoil. For American businesses and consumers however, this acts as a headwind by keeping borrowing costs higher.