Stock markets have fallen after oil prices returned above $100 a barrel in response to the failure of US-Iran peace talks.
The 7% spike for Brent Crude also reflected the blockade of the Strait of Hormuz after President Trump vowed to stop ships from using Iranian ports from today.
Meanwhile, Heathrow reported a 10% spike in transfer passengers last month as it temporarily absorbed demand from elsewhere.
Market update: FTSE 100 shows resilience, airline stocks slump
09:52 , Graeme EvansOil’s return above $100 a barrel today weighed on the FTSE 100 index as traders reacted to the collapse of US-Iran peace talks.
Brent crude rose by more than 7% to $102 as President Trump’s plan to blockade the Strait of Hormuz sparked fears of a worsening global energy crisis.
The FTSE 100 index continued its recent outperformance with a fall of 0.4% or 43.46 points to 10,557.07, which compared with losses of 1% in Paris and Frankfurt.
Russ Mould, AJ Bell investment director, said: “Investors are trying to gauge whether a fragile ceasefire will hold, and they are waiting to see the next moves from Tehran and Washington.
“Against this backdrop, oil above $100 per barrel is no surprise and the longer it persists at this level, the greater the scars for the global economy.
“The stagflation word is being widely aired once again as geopolitical turmoil threatens to stymie international growth and stoke inflationary pressures.”
Wall Street futures are pointing to declines of about 0.5%, suggesting that traders are still hopeful of a near-term resolution to the conflict.
Airlines were among the biggest fallers in London as worries deepened over a supply and cost crunch for jet fuel.
British Airways owner IAG fell 3% or 11.1p to 377.3p, while FTSE 250-listed Wizz Air and easyJet lost 6% and 4% respectively.
Other fallers in the FTSE 100 included Barclays and Standard Chartered following declines of 2%, alongside weakness for builders Barratt Redrow and Persimmon.
Primark owner Associated British Foods fell 3% or 50.5p to 1869.5p after analysts at RBC cut their recommendation to Underperform.
Gains of 1.5% for BP and Shell have offered support to the FTSE 100, alongside a 1% advance for mining giant Glencore.
FTSE 100 continues outperformance, European markets down 1%
09:15 , Graeme EvansThe FTSE 100 index has produced another resilient performance after London’s top flight fell by 0.4% or 40.63 points to 10,559.90 in the first hour of trading.
This compares with declines of 1% for the Dax and Cac 40 in Frankfurt and Paris, as well as the 0.7% reverse for the Nikkei 225 and 0.9% for the Hang Seng index.
The biggest fallers in the FTSE 100 were Primark owner Associated British Foods and British Airways business IAG following declines of just under 3%.
Housebuilders Persimmon and Barratt Redrow fell 2%, alongside Standard Chartered and Barclays.
Gains of 1.5% for BP and Shell have offered support to the FTSE 100, alongside a 1% advance for mining giant Glencore.
The FTSE 100 has risen by more than 6% this year.
FTSE 250 down 0.6%, Wizz Air falls 6% as travel stocks reverse
08:57 , Graeme EvansTravel-focused stocks today dominated the FTSE 250 index after the price of Brent crude rose back above $100 a barrel.
Wizz Air slid 6% or 62p to 930.5p, while easyjet fell 4% or 15.3p to 370.9p and cruise ship operator Carnival lost 3% or 56p to 2005p. Airport retail business WH Smith weakened 3% or 19p to 589.5p.
Other big fallers included B&M European Value Retail after a decline of 5% or 8.5p to 174.5p. The pressure on Aston Martin Lagonda also continued as shares fell 4% or 1.8p to 40.2p.
The FTSE 250 index fell 0.6% or 133.79 points to 22,217.23, having rallied 3.1% last week.
FTSE 100 lower, IAG and Rolls-Royce shares under pressure
08:10 , Graeme EvansThe FTSE 100 index has fallen 0.6% or 63.31 points to 10,537.22, with British Airways owner IAG down 3% or 10.3p to 378.1p.
Rolls-Royce fell 2% or 23.6p to 1243.6p., with Barclays and HSBC among the stocks down by 1.5%.
The market weakness came with the price of Brent crude oil 6.6% higher at $101.46 a barrel.
Capital Economics said: “The breakdown in talks between the US and Iran does not necessarily signal the end of efforts to resolve the conflict but the introduction of a US naval blockade on Iranian shipments transiting the Strait does introduce a new potential flashpoint.
“From a macro and markets perspective, this nudges us closer to the outcomes in our “adverse scenario”.
This would include a drop in global growth into recessionary territory and widespread interest rate hikes. “Whether we get there will depend on how events unfold over the coming week,” the consultancy added.
Week ahead: US bank results and UK GDP
07:32 , Graeme EvansEvents this week are set to provide insight on the impact of the Middle East war, including tomorrow’s release of the IMF World Economic Outlook.
Leading Wall Street banks are also scheduled to disclose their quarterly earnings, starting with Goldman Sachs today and JP Morgan tomorrow.
The state of the UK economy prior to the conflict will be revealed in February’s GDP reading on Thursday, the same day as China releases its Q1 GDP print.
Tesco annual results and Netflix quarterly figures are in the corporate calendar for Thursday.
The supermarket is expected to reveal adjusted operating profits of about £3.1 billion for the year to February, close to the £3.13 billion profit reported a year earlier.
Heathrow passenger traffic rises amid transfer spike
07:17 , Graeme EvansHeathrow today recorded year-on-year growth in passenger numbers during March, despite the impact of Middle East travel disruption.
The 6.9% increase to 6.6 million followed a 10% spike in transfer passengers as the airport absorbed demand from elsewhere due to airspace closures.
Middle East traffic fell 51% to 294,000, but this was offset by a 31% rise in Asia/Pacific passenger numbers and 11.6% rise in EU travel.
Heathrow CEO Thomas Woldbye said: “While Heathrow's long-haul network absorbed demand in March, the outlook for the next few months remains uncertain.
“I'm proud of what colleagues have achieved to quickly adapt and continue giving passengers a great service during difficult times."
FTSE 100 seen lower as oil tops $100, Asia markets fall
07:02 , Graeme EvansThe FTSE 100 index is set to fall after President Trump’s plan for a naval blockade of the Strait of Hormuz caused the price of Brent crude to top $100 a barrel.
The oil benchmark’s surge of more than 7% to $102 a barrel also followed the failure of Saturday’s face-to-face negotiations between the US and Iran.
The Hang Seng index and Nikkei 225 fell 1.2% and 0.8% respectively, while the FTSE 100 is seen opening down by about 0.6%.
The FTSE 100 closed down 2.95 points on Friday for a rise of 2.3% over the week, while the FTSE 250 lifted 0.7% for a 3.1% weekly improvement.
Wall Street futures are about 0.7% lower after Friday’s session saw the the Dow Jones Industrial Average fall 0.6% and the S&P 500 index dip 0.1%
