London close: Stocks jump on opening of Strait of Hormuz as oil prices slide

(Sharecast News) - A plunge in the price of oil pushed UK stocks firmly higher in afternoon trade on Friday, with the FTSE 100 hitting its highest level since early March after Tehran said the Strait of Hormuz was now "completely open" to commercial ships. London's blue chip index settled 0.7% higher at 10,667.63, its highest finish since 2 March, with travel and industrial stocks leading the charge and the outlook for energy costs eased.

Markets across Europe were putting in more impressive gains, with Frankfurt's Dax and Paris's Cac 40 both up at least 2%, while the S&P 500 and Nasdaq on Wall Street raced to new record highs.

Driving gains was the revelation from Iran's foreign minister, Abbas Araghchi, who said in a social media post: "In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire."

Oil prices immediately sank on the news, with Brent crude dropping over $13 to touch an intraday low of $86.09, a level not seen since the first week of March when the conflict between the US and Iran began. By the close of play in London, Brent was 11.0% lower at $88.55 a barrel, while WTI was don 12.6% at $82.78 a barrel.

Araghchi said vessels must transit through a "coordinated route" announced by Iran's maritime authorities, while US president Donald Trump reiterated that America's naval blockade of the channel would "remain in full force and effect as it pertains to Iran, only, until such time as our transaction with Iran is 100% complete".

Axel Rudolph, chief technical analyst at IG, said the developments eased fears around "one of the most critical global oil supply chokepoints" and "fuelled expectations that the nearly 50-day disruption to energy flows may be nearing an end".

"Additional downward pressure on oil prices came from reports that the US could release $20 billion in frozen Iranian funds in exchange for enriched uranium stockpiles, with further negotiations anticipated," he said.

Travel, industrial stocks surge

The collapse in oil prices gave shares in the travel and industrial sectors a big boost in late-afternoon trade, with IAG, Rolls-Royce, InterContinental Hotels and Melrose all finishing up 5% or more on the FTSE 100.

FTSE 250 travel names Wizz Air, easyJet and Carnival also surged on the news.

In contrast, BP and Shell lost 8% and 6% respectively. Both companies have said over recent weeks that first-quarter earnings received a major boost from elevated oil prices, offsetting the negative impact of lost production across the Middle East.

Utilities SSE, Drax and Centrica were also firmly lower after Chancellor Rachel Reeves said that herself and energy secretary Ed Miliband were looking at ways to break the link between electricity and gas prices as electricity becomes a larger part of the energy mix.

Intertek continued to rise, having surged on Thursday after saying it rejected a 5,150p per share takeover proposal from Swedish private equity firm EQT.

Shares in Workspace Group slumped as the office provider said it expected a "substantial step down" in annual trading profit due to inflation, falling rents, higher interest costs and more investment in the business.

Market Movers

FTSE 100 (UKX) 10,667.63 0.73% FTSE 250 (MCX) 23,205.92 1.87% techMARK (TASX) 5,993.44 0.93%

FTSE 100 - Risers

Fresnillo (FRES) 3,782.00p 6.45% International Consolidated Airlines Group SA (CDI) (IAG) 410.10p 6.19% InterContinental Hotels Group (IHG) 147.35p 5.33% Antofagasta (ANTO) 3,959.00p 5.01% Melrose Industries (MRO) 567.20p 4.92% Rolls-Royce Holdings (RR.) 1,310.60p 4.83% Persimmon (PSN) 1,203.00p 4.75% Intertek Group (ITRK) 4,969.00p 4.50% ICG (ICG) 1,871.00p 4.47% Berkeley Group Holdings (The) (BKG) 3,576.00p 4.38%

FTSE 100 - Fallers

BP (BP.) 541.00p -7.36% SSE (SSE) 2,469.50p -6.62% Shell (SHEL) 3,196.00p -5.57% Centrica (CNA) 197.40p -4.96% Glencore (GLEN) 547.10p -1.94% Tesco (TSCO) 485.20p -1.79% Vodafone Group (VOD) 114.45p -1.68% BT Group (BT.A) 217.55p -1.34% National Grid (NG.) 1,274.80p -0.96% Metlen Energy & Metals (MTLN) 35.58p -0.61%

FTSE 250 - Risers

Wizz Air Holdings (WIZZ) 1,040.00p 7.55% Carnival (CCL) 2,178.00p 7.13% Pan African Resources (PAF) 168.04p 6.48% Close Brothers Group (CBG) 496.80p 6.29% Hochschild Mining (HOC) 700.50p 6.06% easyJet (EZJ) 394.10p 6.05% Vistry Group (VTY) 367.60p 5.94% Bellway (BWY) 2,088.00p 5.83% Oxford Nanopore Technologies (ONT) 126.60p 5.50% Ibstock (IBST) 113.60p 5.28%

FTSE 250 - Fallers

Workspace Group (WKP) 350.60p -6.16% Diversified Energy Company (DI) (DEC) 1,100.00p -6.14% Ceres Power Holdings (CWR) 401.40p -5.91% Harbour Energy (HBR) 260.40p -4.96% Bluefield Solar Income Fund Limited (BSIF) 81.00p -4.71% Greencoat UK Wind (UKW) 98.78p -4.56% AEP Plantations (AEP) 1,772.00p -4.22% Ithaca Energy (ITH) 237.80p -4.11% Drax Group (DRX) 839.60p -2.98% The Renewables Infrastructure Group Limited (TRIG) 66.00p -2.65%