Oil prices have surged and the FTSE 100 index is 1% lower amid the conflict in the Middle East.
Brent Crude futures rose 13% at one point as traders focused on disruption in the Strait of Hormuz.
The session also saw a flight to safe havens including gold and the US dollar.
FTSE 100 Live Monday
- Brent Crude price surges
- Hotel chains face CMA probe
- House prices rise
Market update: FTSE 100 down 1%, banks and travel firms retreat
10:13 , Graeme EvansDefence and oil firms provided shelter for investors today as the Middle East conflict sparked a flight from BA owner IAG and events firm Informa.
The FTSE 100 index dropped 1% or 102.13 points to 10,808.42, with banks and the luxury goods group Burberry among other heavily sold stocks.
The performance by London’s top flight compared with declines of 1.5% in Paris and Frankfurt and expectations for heavy losses on Wall Street.
The Nikkei 225 closed 1.3% lower and the Hang Seng index fell 2.1%, but the Shanghai Composite rose 0.5%.
Brent Crude rose 13% at one point before settling 8% higher at $78.78 a barrel, while European natural gas prices surged more than 20% amid fears over the impact of the Strait of Hormuz disruption on global LNG supplies.
Dan Coatsworth, head of markets at AJ Bell, said: “Scenes in the Middle East have caused widespread nervousness across financial markets.
“The US attacks on Iran have caused oil prices to soar amid fears of disruptions to supplies, pushing up costs for businesses and consumers. That ranges from costing more to fill up the car to making it more expensive to run factories.”
The biggest factor in the FTSE 100 decline was the heavyweight banking sector as the uncertain economic outlook caused HSBC to fall 4% or 57.2p to 1336.4p and Barclays lost 5% or 24.3p to 428.5p.
NatWest dropped 23p to 596p and Asia-focused lender Standard Chartered retreated 91.5p to 1740.5p.
The disruption to Middle East flight schedules and potential for higher jet fuel costs meant BA and Iberia owner IAG slumped 5% or 20.9p to 402.8p although shares were 10% lower earlier in the session.
Informa, the business events and academic research business, fell 8% or 71.2p to 767p as the worst performer in the FTSE 100 index.
Holiday Inn owner InterContinental Hotels, which is the subject of an information sharing probe by the Competition and Markets Authority, dipped 5% or $6.2 to $131.3.
The surge in oil price boosted BP shares by 2% or 10.8p to 488.45p and Shell by 3% or 98.5p to 3172p.
Defence firm BAE Systems jumped 5% or 109p to 2221p, while Babcock International added 11p to 1363p.
Other risers included gold miner Endeavour Mining after a gain of 100p to 5390p and National Grid, which lifted 19.5p to 1410.5p.
Gas price surge adds to inflation fears
09:19 , Graeme EvansEuropean natural gas prices have surged by more than 20% amid fears over the impact of the Middle East conflict on global LNG supplies.
Lindsay James, investment strategist at Quilter, said: “Whilst China takes the largest proportion of cargoes, competition for available supplies will now intensify.
“With UK retail customers protected in the short term due to the April energy price cap having already been set, businesses do not enjoy this lagged effect and may face sharply higher energy prices very quickly, potentially challenging the inflation outlook and the expectation for a couple of further rate cuts this year by the Bank of England.”
Capital Economics saidned yesterday that Iranian attempts to block the Strait or Hormuz could cause oil prices to jump, perhaps to around $100 a barrel.
It said that this could add 0.6-0.7 percentage points to global inflation, alongside the impact of a rise in natural gas prices
The consultancy added: “This might slow the pace of monetary easing by major central banks, particularly in emerging markets, where policymakers tend to be more sensitive to swings in commodity prices.”
Brent Crude today settled at $78.65 a barrel, having topped $80 earlier today.
Wall Street futures sharply lower, luxury goods firms struggle
09:00 , Graeme EvansThe FTSE 100 index is down 1%, although that performance compares favourably with the declines of about 2% in Paris and Frankfurt.
Wall Street futures are currently pointing to a fall of 1.3% when the S&P 500 index resumes trading later today.
The Nikkei 225 closed 1.3% lower and the Hang Seng index dropped 2.1%, while the Shanghai Composite rose 0.5%.
Defence, oil, utility and gold mining stocks offered some support to the FTSE 100 index this morning, offset by weakness in the travel sector.
Susannah Streeter, Wealth Club chief investment strategist, said: “Financial stocks are also sharply lower, as investors worry about the implications of prolonged fighting for economies, the potential drag on demand for borrowing, and the increased risk of loans turning bad.”
BAE Systems rose 7% at the top of the FTSE 100, followed by a 4% gain for Shell and 3% for Endeavour Mining.
Victoria Scholar, head of investment at Interactive Investor, added: “Luxury stocks like LVMH, Kering, Swatch, and Hermes are also struggling amid fears that the tensions in the Middle East could weigh on designer spending particularly in places like Dubai, a global hub for luxury consumers, if there is less travel and tourism in the region. Inditex is also on track for its worst session in almost a year.”
IAG down 7% as FTSE 100 falls 1%, Shell up 5%
08:19 , Graeme EvansThe FTSE 100 index has fallen 1% or 114.06 points to 10,796.49.
The disruption to Middle East travel and potential for higher jet fuel costs meant the shares of British Airways and Iberia owner IAG slumped by 10% at one point. They later stood 7% or 28.4p cheaper at 395.3p.
Low-cost airline easyJet also fell 5% or 21.3p to 443.6p while Holiday Inn owner InterContinental Hotels dropped 5% or $7.50 to $130.
Banks are also under pressure, with Lloyds Banking Group down 3% or 3.5p to 99p.
Trade shows and exhibitions business Informa fell 11% or 89.4p to 748.8p.
The surge in oil price has left BP and Shell shares 5% higher - up 21.5p at 499.15p and 157p to a record 3230.5p respectively.
The shares of defence firm BAE Systems jumped 7% or 152p to 2264p.
Hotel chains facing CMA investigation
08:03 , Graeme EvansHotel firms Hilton, Marriott and Holiday Inn owner InterContinental Hotels Group and the commercial property data analytics firm CoStar are under investigation by the UK competition watchdog over suspected sharing of sensitive information.
The Competition and Markets Authority (CMA) is looking into whether the four companies colluded over price by sharing information through the use of data analytics tools and so-called algorithms to help them make commercial decisions.
The CMA said: “At this stage, no assumptions should be made about whether the law has been broken.
“Following a period of investigation and information gathering, the CMA may issue a statement of objections if it comes to the provisional view that competition law has been infringed.”
The probe comes as part of the regulator’s push to ensure new technology, such as pricing algorithms, supports fair competition and is not misused to harm consumers.
Average house price up in February - Nationwide
07:49 , Graeme EvansThe average UK house price increased by 0.3% month-on-month in February, building society Nationwide said today.
Property values rose by 1% annually, with both rates of increase being unchanged compared with January. The typical house price in February was £273,176.
Chief economist Robert Gardner said: “Annual house price growth remained steady at 1% in February. Prices increased by 0.3% month-on-month, after taking account of seasonal effects.
“This reinforces the view of a modest recovery after a dip at the end of 2025, most likely reflecting uncertainty around potential property tax changes ahead of the Budget.”
FTSE 100 seen lower amid calm reaction to conflict
07:26 , Graeme EvansTrading platform IG said the initial market reaction to the war in the Middle East has been relatively muted, with the FTSE 100 index seen opening about 0.7% lower.
Chris Beauchamp, IG’s chief market analyst, said: “While we have seen a significant surge in oil prices since markets opened last night, the gains appear contained for now as we wait to see if shipping through Hormuz can continue at lower levels or will be blocked entirely.
“Oil and gas infrastructure in the region has not yet been extensively targeted, keeping oil well south of the $100 barrel range that many expected as a result of the weekend.”
“It is a similar story in stock markets. There have been losses, but investors have had one eye on the possibility of war for weeks.
“But with Trump saying the campaign could run for four weeks, there is plenty of scope for more downside should the conflict widen to encompass oil and gas infrastructure, a move that would likely see oil make further progress towards three figures.”
Brent Crude near $80 amid Strait of Hormuz halt
07:11 , Graeme EvansOil prices rose by as much as 13% in Asian trading earlier today, with Brent crude above $80 a barrel at one point.
The surge comes amid disruption to tanker movements in the Strait of Hormuz, through which about 20% of global oil supplies and about 20% of LNG passes.
OPEC+ oil producers agreed on Sunday to raise output by 206,000 barrels per day from April, although this is less than 0.2% of global demand.
Last June, targeted US strikes on Iran quickly $10 a barrel to Brent crude prices.
Emma Wall, Hargreaves Lansdown chief investment strategist, said: “Iran is only responsible for around 5% of global oil supply, but the UAE, which has come under retaliatory fire because of its US military bases, is the fifth largest global exporter.
“Further pressures were added yesterday afternoon as Iran targeted the Strait of Hormuz, a narrow pass between Oman and Iran through which ships carrying around a fifth of the world’s oil and gas pass daily.
“In response, tankers halted movement to protect their cargo and have yet to resume normal activity.”
Oil prices surge on Middle East conflict, FTSE 100 seen lower
07:01 , Graeme EvansBrent Crude futures are 8% higher at $78.60 a barrel, having surged by as much as 13% earlier today. Gold, meanwhile, rose by 2% to $5386 an ounce as traders .
The FTSE 100 index, which closed at a record 10,910.55 on Friday, is seen falling by 0.7% at today’s opening bell.
Asia markets have posted heavy losses in the wake of events in the Middle East, with the Nikkei 225 down 1.3% and the Hang Seng index off 2%.
Wall Street futures are pointing to a decline of about 1%. The flight to safe havens meant the dollar index today rose to its highest level in over a month, with the pound this morning down 0.9% at $1.3359.
On Friday, the Dow Jones Industrial Average fell 1.1%, the Nasdaq Composite dropped 0.9% and the S&P 500 lost 0.4%.
