London midday: FTSE stays down as US-Iran tensions escalate

(Sharecast News) - London stocks were still in the red by midday on Monday, while oil prices rose as tensions between the US and Iran ramped up again ahead of the ceasefire deadline this week. The FTSE 100 was down 0.6% at 10,600.29, while Brent crude was up 4.8% at $94.71 a barrel. Despite the losses, the top-flight index was faring better than its European peers thanks to its heavy weighting in oil majors.

Kathleen Brooks, research director at XTB, said: "Financial markets have been jostled by news flow over the weekend. On Friday the Strait of Hormuz was back open and tankers were passing through the waterway. Iran halted all traffic through the Strait on Saturday, claiming that the US had broken the terms of their agreement, and then on Sunday the US Navy intercepted an Iranian ship on the coast of Oman, fired at it and boarded the vessel.

"The situation has deteriorated and once more traffic through the Strait of Hormuz is at a standstill. Today's jump in oil prices and the pullback in stocks is a reminder that the current ceasefire that expires on Wednesday is fragile. The latest round of peace talks in Pakistan scheduled for Monday are now in jeopardy. Although a US delegation is in the region, Iran has rebuffed these talks, and it is unclear if they will take place.

"Failed negotiations at this stage is problematic since it is an obstacle to negotiating a longer ceasefire, the current one expires on Wednesday. Unless relations between the US and Iran improve in the next two days, we could see a resumption of the bombing campaigns from both sides, and more volatility for financial markets.

"The diplomatic setback has knocked market confidence at the start of this week, and we expect to see an unwinding of some of Friday's positions as the market rapidly prices out the prospect of energy supplies returning to normal."

On home shores, a survey showed consumer confidence deteriorated in April, with the S&P Global consumer sentiment index falling to a 33- month low of 42.3 from 44.1 in March.

Maryam Baluch, economist at S&P Global Market Intelligence, said: "Consumer sentiment weakened further at the start of the second quarter, as the conflict in the Middle East weighed heavily on confidence.

"Views on the labour market soured for the first time in almost three years, while all other measures signalled more acute drags on overall sentiment, underscoring a growing unease among households."

Separate figures from Rightmove showed house prices ticked higher in April despite a spike in mortgage rates following the outbreak of war in the Middle East.

According to the latest house price index from Rightmove, prices rose 0.8%, taking the average asking price up to £373,971. This is despite the average two-year fixed mortgage rate now standing at 5.42%, compared to 4.25% before the US first attacked Iran at the end of February.

Stiff competition among sellers further supported prices, with the number of homes for sale at an 11-year high for the time of year.

In equity markets, BA and Iberia owner IAG, Wizz Air, easyJet and cruise operator Carnival were among the worst performers.

Housebuilders were also under pressure, with Persimmon, Barratt Redrow, Vistry and Bellway all lower.

Workspace fell after Deutsche Bank downgraded the office space provider to 'hold' from 'buy' and cut the price target to 400p from 480p as it said the company's fourth-quarter update painted "another challenging picture" for the business.

On the upside, oil giants BP and Shell gushed higher as oil prices rose. Ithaca, Harbour Energy and Diversified Energy also racked up strong gains.

Centrica ticked up as Citi reiterated its 'buy' rating on the shares and said any weakness was a buying opportunity following the share price fall on Friday after Chancellor Rachel Reeves said the government was considering cutting the link between electricity and gas prices. Severn Trent and United Utilities were also in the black, recovering from Friday's losses.

Engineer Renishaw surged as it lifted earnings and revenue guidance for the second time in three months on the back of "particularly strong" demand from the semiconductor and electronics manufacturing equipment, and defence & aerospace sectors.

Fintech group Plus500 also advanced as it bumped up its full-year profit outlook following a "strong" first-quarter performance.

Market Movers

FTSE 100 (UKX) 10,600.29 -0.63% FTSE 250 (MCX) 22,954.00 -1.09% techMARK (TASX) 5,964.25 -0.49%

FTSE 100 - Risers

BP (BP.) 557.20p 3.11% Centrica (CNA) 202.60p 2.63% Tesco (TSCO) 494.90p 2.41% Reckitt Benckiser Group (RKT) 5,116.00p 2.32% Shell (SHEL) 3,268.00p 2.28% British American Tobacco (BATS) 4,213.00p 1.74% Admiral Group (ADM) 3,428.00p 1.54% SSE (SSE) 2,501.50p 1.42% Imperial Brands (IMB) 2,807.50p 1.06% Severn Trent (SVT) 3,158.00p 0.77%

FTSE 100 - Fallers

Antofagasta (ANTO) 3,779.50p -4.66% Metlen Energy & Metals (MTLN) 34.23p -3.65% Persimmon (PSN) 1,161.00p -3.57% Rolls-Royce Holdings (RR.) 1,270.60p -2.95% International Consolidated Airlines Group SA (CDI) (IAG) 398.10p -2.88% Melrose Industries (MRO) 552.60p -2.64% NATWEST GROUP (NWG) 610.60p -2.56% Barratt Redrow (BTRW) 270.50p -2.45% Entain (ENT) 618.20p -2.40% Informa (INF) 830.80p -2.38%

FTSE 250 - Risers

Renishaw (RSW) 4,436.00p 6.48% Spire Healthcare Group (SPI) 171.80p 4.75% Ithaca Energy (ITH) 248.90p 4.63% Harbour Energy (HBR) 272.20p 4.36% Diversified Energy Company (DI) (DEC) 1,136.00p 3.28% Telecom Plus (TEP) 1,400.00p 2.94% Plus500 Ltd (DI) (PLUS) 4,582.00p 2.87% RTW Biotech Opportunities Ltd (RTW) 2.28p 2.24% Computacenter (CCC) 3,346.00p 2.07% Drax Group (DRX) 853.00p 1.69%

FTSE 250 - Fallers

Ibstock (IBST) 106.80p -5.99% Wizz Air Holdings (WIZZ) 986.00p -5.29% Vistry Group (VTY) 351.20p -4.62% Raspberry PI Holdings (RPI) 635.50p -4.40% Pan African Resources (PAF) 160.96p -4.23% Oxford Nanopore Technologies (ONT) 121.40p -4.11% Hays (HAS) 32.38p -4.04% Marshalls (MSLH) 146.40p -3.88% Workspace Group (WKP) 338.00p -3.59% Bellway (BWY) 2,018.00p -3.45%