FTSE 100 Ends Lower as Oil Prices Climb on Iran War Impasse
London's blue-chip index, the FTSE 100, closed down by 4.82 points at 9,967.35 on Friday, underperforming European and US markets amid rising oil prices and continued deadlock in the Iran war. The broader FTSE 250 fell 331.32 points, or 1.6%, to 20,964.75, while the AIM All-Share dropped 13.43 points, or 1.9%, to 705.63. For the week, the FTSE 100 managed a modest 0.5% gain, but the FTSE 250 and AIM All-Share declined by 1.8% and 1.7%, respectively.
Market Sentiment Weighed by Middle East Tensions
Financial markets remain concerned over the escalating conflict in the Middle East, particularly the control of the Strait of Hormuz by Iran, which has disrupted shipping and fueled uncertainty. David Morrison, senior market analyst at Trade Nation, commented, "The simple fact is that sentiment is likely to stay negative for as long as the Strait of Hormuz remains unsafe for shipping and controlled by Iran." On Thursday, US President Donald Trump extended his deadline for Tehran to open the strait by 10 days, threatening the destruction of Iran's energy assets if compliance is not met. However, this move failed to alleviate market anxieties, as Iran maintains its hold on the strategic waterway.
Oil Prices Resume Upward Trajectory
Amid the geopolitical stalemate, oil prices continued their ascent. Brent crude rose to $111.63 per barrel on Friday afternoon, up from $108.80 late Thursday. This increase reflects ongoing fears of supply disruptions and potential escalation in the region. Reports suggest the US is considering deploying up to 10,000 additional troops to the Middle East, raising speculation about a possible ground operation in Iran. Kathleen Brooks, research director at XTB, noted, "Traders are now discounting the daily torrent of posts and incoherent press conferences from the White House, as the war rages on. Investors are facing the facts: the Strait of Hormuz is effectively closed and it does not appear that there is a real end in sight to the war."
Global Market Performance and Currency Movements
European equities also faced declines, with Paris's CAC 40 closing down 0.9% and Frankfurt's DAX 40 ending 1.4% lower. In the US, stocks were lower: the Dow Jones Industrial Average fell 1.1%, the S&P 500 dropped 1.0%, and the Nasdaq Composite declined 1.4%. Treasury yields edged higher, with the US 10-year yield widening to 4.42% from 4.40% and the 30-year yield stretching to 4.95% from 4.94%. Currency markets saw the pound fall to $1.3288 from $1.3338 against the US dollar, while the euro weakened to $1.1521 from $1.1534.
Notable Stock Movements in London
Supporting the FTSE 100, AstraZeneca surged 3.4% after reporting positive phase three results for its chronic obstructive pulmonary disease treatment, tozorakimab. The drug showed significant reductions in exacerbations in trials, with peak sales projected at $3-5 billion. Other gainers included 3i, which rallied 1.0% after a previous slump, and gold miners Fresnillo and Endeavour Mining, up 0.6% and 1.9% respectively as gold prices rose to $4,517.90 per ounce. NatWest advanced 0.9% following a price target upgrade by Deutsche Bank.
On the downside, Metlen Energy & Metals was the biggest faller, dropping 8.6% due to delays in financial statement audits. Housebuilders faced pressure after Bank of America cut price targets and profit forecasts, leading to declines in Barratt Redrow, Persimmon, and Taylor Wimpey.
Outlook and Upcoming Events
Looking ahead, Monday's economic calendar includes UK mortgage approvals data, German and Italian inflation figures, and the Dallas Fed manufacturing index in the US. Corporate results are expected from Artisanal Spirits, Aoti, and RTW Biotech. Additionally, Europe will transition to daylight saving time on Sunday, with clocks moving forward by one hour. As the Iran war remains unresolved, market volatility is likely to persist, with investors closely monitoring developments in the Middle East and their impact on global oil supplies and financial stability.
