FTSE 100 Rally Interrupted by Geopolitical Tensions and Corporate Moves
Stock prices in London closed lower on Thursday, with the FTSE 100 index breaking its recent winning streak. The decline was driven by a sharp fall for British Gas owner Centrica, although oil majors like BP and Shell saw gains as Brent crude surged amid uncertainty in Iran.
Market Performance and Analyst Insights
The FTSE 100 index closed down 59.14 points, or 0.6%, at 10,627.04. Similarly, the FTSE 250 ended down 112.95 points, or 0.5%, at 23,573.49, and the AIM all-share closed down 0.60 points, or 0.1%, at 811.14. In European equities, the Cac 40 in Paris closed down 0.4%, and the Dax 40 in Frankfurt ended 0.9% lower.
The pound slumped to 1.3455 dollars on Thursday afternoon from 1.3548 at the equities close on Wednesday. StoneX analyst Fawad Razaqzada commented, "The index fell back as investors digest a number of earnings results. But the downside could prove to be short-lived. Supported by a weaker pound and expectations that the Bank of England will cut rates in March, and potentially again in June, investors have been piling into UK stocks lately. That trend is likely to stay for a while yet. Today, rising oil prices amid Middle East tensions are helping to cushion the falls, with energy names like BP providing support."
Iran Tensions and Oil Price Impact
Fears around developments in Iran were a key focus on Thursday. US President Donald Trump urged Tehran to strike a "meaningful" deal as a significant American military build-up takes shape in the Middle East amid US threats of action. He stated, "It's proven to be over the years not easy to make a meaningful deal with Iran. We have to make a meaningful deal otherwise bad things happen." Trump warned that Washington "may have to take it a step further" without any agreement, adding, "You're going to be finding out over the next probably 10 days."
Brent oil was higher at 71.71 dollars a barrel on Thursday afternoon from 69.62 late on Wednesday. Gold barely budged, sitting at 5,003.14 dollars an ounce, against 5,002.90. As a result, shares in BP and Shell ended up 2.0% and 0.5% respectively.
Global Market Movements and Federal Reserve Minutes
Stocks in New York were lower, with the Dow Jones Industrial Average down 0.5%, the S&P 500 index falling 0.3%, and the Nasdaq Composite losing 0.2%. The yield on the US 10-year Treasury was unchanged from Wednesday at 4.08%, while the yield on the US 30-year Treasury widened to 4.71% from 4.69%.
Minutes from the latest Federal Reserve meeting revealed that some policymakers believe the central bank should not rule out rate hikes. "Several participants indicated that they would have supported a two-sided description of the committee's future interest rate decisions, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels," according to the minutes released on Wednesday. The Fed last month left the federal funds rate target range at 3.50%-3.75%.
Centrica's Share Buyback Pause and Corporate Updates
In London, Centrica fell the most on the FTSE 100, losing 4.7% after the firm announced it is pausing its share buybacks to invest in its infrastructure portfolio, including nuclear power. Analysts noted that its 2026 guidance "appears weak." Centrica returned £1.1 billion in total to shareholders during 2025, including £800 million through share buybacks, and completed its overall £2 billion share buyback programme in January, repurchasing a quarter of its total share capital.
However, the company stated, "We are now pausing the programme as we believe investment offers an opportunity to create more value for shareholders at this juncture. We will retain our capital discipline, the balance sheet will remain under constant review and excess capital will be returned to shareholders." Berenberg said the firm is guiding for a lower 2026, with improvements in the long term. UBS analysts added that guidance for 2026 "appears weak" as the centre of the ebitda range for the new retail and optimisation segments is £900 million, versus UBS's £977 million.
AJ Bell analyst Dan Coatsworth remarked, "Centrica is hitting pause on buybacks so it can allocate spending to growth projects including the Sizewell C nuclear power. Executing on these ventures will be challenging and will put a dent in the company's healthy cash position but could deliver more stable earnings if they ultimately prove successful."
Other Notable Stock Movements
Mondi shares climbed 1.2% as the packaging firm slashed its dividend amid a "prolonged cyclical downturn" facing the industry. It chopped its final dividend to 4.92 euro cents in 2025, down sharply from 46.67 cents in 2024, reducing the total payout for 2025 to 28.25 cents from 70 cents. For 2025, Mondi reported a 29% slump in pre-tax profit to 269 million euros from 378 million in 2024, though revenue was up 3.2% to 7.66 billion euros.
On the FTSE 250 index, Raspberry Pi retreated 6.9% after making sharp gains this week, though it is still up 36% over the last week. On AIM, shares in Thruvision Group jumped 20% after securing multiple new contracts at UK custodial facilities worth £500,000 in total. CEO Victoria Balchin said, "These contract awards reflect the growing recognition of Thruvision's technology across UK custodial settings and the clear operational value it delivers."
The biggest risers on the FTSE 100 were British American Tobacco, up 129.0p at 4,473.0p, Relx, up 59.0p at 2,293.0p, BAE Systems, up 53.0p at 2,163.0p, BP, up 9.5p at 479.0p, and Babcock International, up 21.0p at 1,397.0p. The biggest fallers were Centrica, down 10.1p at 185.9p, Barclays, down 18.1p at 467.9p, Rio Tinto, down 271.0p at 7,118.0p, easyJet, down 16.8p at 475.5p, and Metlen Energy & Metals, down 1.2p at 34.9p.
