London open: Stocks fall on Middle East tensions as oil prices jump

19th Apr 2024 08:48

(Sharecast News) - UK stocks fell on Friday morning after reports of Israel launching a retaliatory attack on Iran emerged, sending oil prices sharply higher.

The FTSE 100 was down 0.6% at 7,827 after an hour's trade, with airline stocks among the worst performers.

"The generally bearish wave of sentiment following the most recent Middle East attack inevitably washed on to UK shores," said Richard Hunter, head of markets at Interactive Investor. "Airline shares were hardest hit by the double whammy of higher oil prices and the possibility of fewer flights and therefore lower revenues, not only in terms of flights to the region but also on the possibility that customers might be more cautious about travelling at all."

Brent crude was up 1% at $88 a barrel, having surged as high as 4.2% early on to $90.75 before paring gains quickly, after reports that Israel struck a target in the central Iranian province of Isfahan, where the country's nuclear installations are located.

The retaliatory strike followed an Iranian attack with over 300 drones and missiles last weekend, though they caused only minor damage after 99% of the drones and missiles were downed mid-flight.

"We will likely see a further flight to safety before the weekly closing bell on fear of further escalation of tensions during the weekend. Shorting oil and gold is risky as Middle East is boiling. Having exposure to these commodities is a good hedge against the rising geopolitical tensions in the region," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Also weighing on sentiment early on were comments from New York Federal Reserve president John Williams overnight, who warned that monetary policy tightening might be necessary in light of resilient economic data. "If the data are telling us that we would need higher interest rates to achieve our goals, then we would obviously want to do that," he said.

In other news, German industrial producer prices fell 2.9% in March year on year, driven by lower energy prices, the federal statistics agency said on Friday. Prices rose by 0.2% compared with February, it added. Energy prices in March were down 7% annually and unchanged versus February 2024.

Meanwhile, UK retail sales were flat in March, undershooting expectations, according to figures released on Friday by the Office for National Statistics. Retail sales were unchanged on the month following a revised 0.1% jump in February and versus expectations for a 0.3% increase.

In equity news, FTSE 250-listed investment management firm Man Group dropped 5% after net outflows during the first quarter caught investors by surprise. Assets under management rose by 5% from the preceding three months, as a $9.8bn positive swing in investment performance outweighed $1.6bn in net outflows. However, consensus forecasts were for positive net flows of $1.3bn.

Airline stocks were pulling back after a strong performance the previous session as oil prices rose, with IAG and easyJet among the worst performers on the FTSE 100. Travel agent TUI also fell.

Market Movers

FTSE 100 (UKX) 7,826.67 -0.64%

FTSE 250 (MCX) 19,276.60 -0.89%

techMARK (TASX) 4,370.83 -0.42%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,432.00p 0.91%

Airtel Africa (AAF) 107.50p 0.66%

Croda International (CRDA) 4,875.00p 0.54%

Haleon (HLN) 322.90p 0.53%

Compass Group (CPG) 2,180.00p 0.51%

National Grid (NG.) 1,034.50p 0.44%

Imperial Brands (IMB) 1,755.50p 0.40%

British American Tobacco (BATS) 2,299.00p 0.26%

Glencore (GLEN) 476.05p 0.22%

Unilever (ULVR) 3,775.00p 0.13%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 165.10p -2.77%

Scottish Mortgage Inv Trust (SMT) 802.00p -2.69%

JD Sports Fashion (JD.) 117.50p -2.33%

easyJet (EZJ) 518.40p -2.19%

IMI (IMI) 1,702.00p -2.18%

Intermediate Capital Group (ICG) 1,980.00p -2.17%

Rolls-Royce Holdings (RR.) 394.70p -1.94%

Pershing Square Holdings Ltd NPV (PSH) 3,800.00p -1.91%

Weir Group (WEIR) 1,955.00p -1.91%

Marks & Spencer Group (MKS) 245.70p -1.80%

FTSE 250 - Risers

Darktrace (DARK) 473.30p 3.25%

Safestore Holdings (SAFE) 760.00p 1.13%

Spirent Communications (SPT) 195.90p 0.98%

Jlen Environmental Assets Group Limited NPV (JLEN) 88.60p 0.91%

Ashmore Group (ASHM) 182.00p 0.89%

NextEnergy Solar Fund Limited Red (NESF) 73.25p 0.76%

Greencoat UK Wind (UKW) 137.00p 0.74%

FirstGroup (FGP) 166.80p 0.72%

Hochschild Mining (HOC) 152.00p 0.66%

Moonpig Group (MOON) 171.00p 0.59%

FTSE 250 - Fallers

Man Group (EMG) 255.00p -5.06%

Watches of Switzerland Group (WOSG) 325.40p -3.15%

Helios Towers (HTWS) 92.80p -3.13%

Bank of Georgia Group (BGEO) 4,770.00p -2.65%

Polar Capital Technology Trust (PCT) 2,810.00p -2.60%

Paragon Banking Group (PAG) 669.00p -2.41%

Indivior (INDV) 1,489.00p -2.30%

Trustpilot Group (TRST) 184.80p -2.22%

Jupiter Fund Management (JUP) 79.80p -2.21%

TUI AG Reg Shs (DI) (TUI) 562.00p -2.18%