Source: Sharecast
At 0840 BST, the FTSE 100 was down 0.4% at 10,291.59, while Brent crude was up 1% at $112.34 a barrel following a report that US president Donald Trump has instructed aides to prepare for an extended naval blockade of Iran.
According to the Wall Street Journal, citing US officials, Trump is targeting the regime’s coffers in a high-risk bid to compel a nuclear capitulation Tehran has long refused.
It was understood that in recent meetings, including a Monday discussion in the Situation Room, Trump opted to continue squeezing Iran’s economy and oil exports by preventing shipping to and from its ports.
Officials told the WSJ that Trump had assessed that his other options - resume bombing or walk away from the conflict - carried more risk than maintaining the blockade.
Susannah Streeter, chief investment strategist at Wealth Club, said: "With the standoff over the Strait of Hormuz continuing and safe passage seemingly only guaranteed for luxury mega-yachts, rather than shipments relied on by many millions, it’s keeping worries about an energy crunch front and centre.
"There are plenty of repercussions rippling through the global economy, not least higher borrowing costs. This looks set to put the brakes on advances for the internationally focused FTSE 100 as concerns collide about the impact on global fortunes and the UK economy.
"The benchmark, Brent crude, is still hovering around the painful level of $111 a barrel, a three-week high, and the big worry is that as companies have to shoulder elevated bills for longer, they’ll have little choice but to pass on the costs through higher prices, while employees will clamour for higher wages as inflation rises.
"Although this week, with crucial central bank meetings taking place, policymakers are set to stay wary and are likely to press pause, the expectation is that the only way is up for interest rates as the year wears on and vital supplies of commodities remain constrained."
Away from the Iran war, investors were eyeing a slew of US tech earnings, with Alphabet, Microsoft, Amazon and Meta Platforms all slated to report.
Anna Macdonald, investment strategy director at Hargreaves Lansdown, said: "Given the outsized weighting of these companies in the index, and the enormous capital expenditure they have announced to build AI capabilities, these results will be closely watched by investors globally."
Meanwhile, the Federal Reserve is widely expected to keep the policy rate at 3.50-3.75% later, while the Bank of England and the European Central Bank will make their latest policy announcements on Thursday.
In equity markets, St James’s Place slumped as it reported a drop in first-quarter funds under management, citing a decline in global markets.
GSK was in the red despite posting above-forecast first-quarter profits, boosted by robust demand for its specialist HIV and oncology drugs.
Panadol owner Haleon fell as it said a poor cold and flu season had weighed on first-quarter sales, but reiterated full-year guidance.
Lloyds Banking Group edged lower even as it reiterated full-year guidance and posted a better-than-expected 33% jump in first-quarter pre-tax profit to £2.0bn.
On the upside, DCC was the top riser on the FTSE 100 as markets blog Betaville suggested the company may have attracted takeover interest.
Luxury car maker Aston Martin shot higher after it held guidance and said first-quarter losses had narrowed, and that the Iran war had so far not impacted earnings.
Elementis rallied as it backed its full-year expectations and reported a rise in first-quarter profit and revenue as its ‘Elevate Elementis’ strategy delivers ahead of plan.
Market Movers
FTSE 100 (UKX) 10,291.59 -0.40%
FTSE 250 (MCX) 22,427.67 0.13%
techMARK (TASX) 5,836.70 -0.54%
FTSE 100 - Risers
DCC (CDI) (DCC) 5,670.00p 5.30%
Smurfit Westrock (DI) (SWR) 2,988.00p 3.32%
Babcock International Group (BAB) 1,112.00p 1.60%
Flutter Entertainment (DI) (FLTR) 8,122.00p 1.32%
Pershing Square Holdings Ltd NPV (PSH) 4,200.00p 1.06%
Croda International (CRDA) 2,866.00p 1.06%
Mondi (MNDI) 741.60p 0.98%
Antofagasta (ANTO) 3,519.50p 0.95%
Anglo American (AAL) 3,555.50p 0.89%
Entain (ENT) 564.60p 0.79%
FTSE 100 - Fallers
St James's Place (STJ) 1,174.00p -6.23%
GSK (GSK) 1,958.50p -2.34%
Haleon (HLN) 342.90p -2.00%
BAE Systems (BA.) 2,017.50p -1.81%
Next (NXT) 13,110.00p -1.69%
Burberry Group (BRBY) 1,152.20p -1.47%
3i Group (III) 2,553.00p -1.20%
Relx plc (REL) 2,641.00p -1.16%
United Utilities Group (UU.) 1,328.50p -1.08%
Smith & Nephew (SN.) 1,145.00p -1.08%
FTSE 250 - Risers
Ceres Power Holdings (CWR) 562.50p 13.35%
Moonpig Group (MOON) 218.20p 4.70%
Utilico Emerging Markets Ltd (DI) (UEM) 295.00p 3.51%
Oakley Capital Investments Limited (DI) (OCI) 491.50p 3.26%
Elementis (ELM) 155.20p 3.19%
Aston Martin Lagonda Global Holdings (AML) 41.00p 2.65%
Raspberry PI Holdings (RPI) 571.00p 2.61%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 1,360.00p 2.41%
Helios Towers (HTWS) 198.30p 2.38%
WPP (WPP) 264.00p 2.34%
FTSE 250 - Fallers
Oxford Biomedica (OXB) 587.00p -2.33%
Oxford Nanopore Technologies (ONT) 110.50p -1.87%
Grainger (GRI) 161.50p -1.40%
Sirius Real Estate Ltd. (SRE) 97.85p -1.16%
Pennon Group (PNN) 522.00p -1.14%
Domino's Pizza Group (DOM) 194.80p -1.12%
BlackRock World Mining Trust (BRWM) 890.00p -1.11%
SSP Group (SSPG) 165.10p -1.08%
Hammerson (HMSO) 333.20p -1.07%
FirstGroup (FGP) 165.70p -0.96%