London midday: FTSE drops as US-Iran stalemate weighs on sentiment

(Sharecast News) - London stocks had extended losses by midday on Friday as oil prices rose amid ongoing concerns about the US-Iran standoff in the Strait of Hormuz and the prospect of a prolonged conflict, as investors digested an unexpected jump in UK retail sales.

The FTSE 100 was down 0.6% at 10,391.42, while Brent crude was 2% higher at $107.17 a barrel.

Suggestions that the war in Iran could drag on dented sentiment, after US president Donald Trump said he wouldn't rush a deal.

Questioned by reporters at the White House about the timeframe for the war, President Trump said: "Don't rush me."

He added: "So we're in Vietnam, like, for 18 years; we're in Iraq for many, many years. ... I don't like to say World War II, because that was a biggie, but we were four and a half, almost five years in World War II."

Meanwhile, he announced on Truth Social that the ceasefire between Lebanon and Israel will be extended by three weeks following talks between the two sides at the White House. The US president said a meeting between vice president JD Vance, secretary of state Marco Rubio and the ambassadors to Israel and Lebanon had gone "very well".

"The United States is going to work with Lebanon in order to help it protect itself from Hezbollah," he said.

"The Ceasefire between Israel and Lebanon will be extended by THREE WEEKS. I look forward in the near future to hosting the Prime Minister of Israel, Bibi Netanyahu, and the President of Lebanon, Joseph Aoun. It was a Great Honor to be a participant at this very Historic Meeting."

Joshua Mahony, chief market analyst at Scope Markets, said: "Trump certainly appears to favour a negotiated agreement over a resumption of the military conflict, although he admitted that the decision to go back on the agreement that reopened the Straits last Friday was his own.

"The decision to extend the Lebanon deal is at least a nod to the fact that they are maintaining one of the key requirements requested by the Iranians; a decision which looks like Trump extending an olive branch to Iran. However, with both sides seemingly at an impasse, there is a fear that the impact on the global economy will only grow with each day that passes."

On home shores, comments from Bank of England deputy governor Sarah Breeden did little to improve the mood, after she told the BBC that stocks were too high and set to fall. "There's a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point," she said.

Russ Mould, investment director at AJ Bell, said: "It's unusual for a Bank of England official to explicitly warn about a potential stock market pullback, and the comment might have contributed to some of the FTSE 100's decline on Friday.

"Breeden wasn't simply referring to the Middle East events - she also referenced concerns around a private credit crunch, high equity valuations and AI.

"While these have all been worry points for investors in recent months, markets have wobbled and then regained their poise. That suggests investors aren't blind to potential problem areas, instead it implies they're comfortable with the risks and that they believe any problems can be contained."

On the macro front, figures from the Office for National Statistics showed that retail sales unexpectedly rose in March as consumers rushed to get fuel after the outbreak of war in the Middle East.

Retail sales volumes increased by 0.7% following a 0.6% decline in February, and versus analysts' expectations for sales to be flat. Fuel sales shot up 6.1% for the month, the highest level since April 2021.

Excluding automotive fuel, retail sales were up 0.2% on the month.

For the quarter from January to March, retail sales were up 1.6%.

Hannah Finselbach, senior statistician at the ONS, said: "Retail sales rose in the three months to March, with commercial art galleries doing well earlier in the quarter and sales in beauty products stores rising as retailers reported launching new collections. Online shops also saw strong sales across the period.

"Motor fuel sales were up on the quarter, with retailers commenting that many motorists had been filling up their tanks in March following the start of conflict in the Middle East."

In equity markets, paper and packaging firm Mondi slid as it reported a fall in first-quarter underlying earnings as market conditions remained "challenging."

JD Sports was also under the cosh following a Financial Times report that Andy Higginson quit as chair this week after pushing for chief executive R�gis Schultz to be ousted and failing to win unanimous backing for the move from the retailer's board.

On the upside, British American Tobacco rallied after a double-upgrade to 'overweight' at Morgan Stanley, which said it was its top pick in European tobacco.

Oil giants BP and Shell gushed higher in tandem with oil prices.

Sainsbury's advanced after JPMorgan reiterated its 'overweight' rating on the stock and as it launched a share buyback of up to �300m.

Computacenter surged after saying full-year results were set to be "comfortably ahead" of market expectations following a strong performance in the first quarter, significantly ahead of the prior year and well above its own expectations.

Market Movers

FTSE 100 (UKX) 10,391.42 -0.63%

FTSE 250 (MCX) 22,531.92 -1.02%

techMARK (TASX) 5,851.11 -0.73%

FTSE 100 - Risers

British American Tobacco (BATS) 4,342.00p 2.77%

BT Group (BT.A) 224.55p 1.82%

Sainsbury (J) (SBRY) 345.00p 1.59%

BP (BP.) 577.10p 1.30%

Intertek Group (ITRK) 4,899.00p 1.11%

Tesco (TSCO) 491.80p 1.02%

Shell (SHEL) 3,332.50p 1.00%

Centrica (CNA) 209.70p 0.77%

National Grid (NG.) 1,298.40p 0.76%

Associated British Foods (ABF) 1,852.00p 0.68%

FTSE 100 - Fallers

Mondi (MNDI) 780.40p -7.70%

JD Sports Fashion (JD.) 69.38p -3.80%

Convatec Group (CTEC) 217.20p -3.47%

Antofagasta (ANTO) 3,712.00p -3.11%

AstraZeneca (AZN) 14,058.00p -2.87%

Melrose Industries (MRO) 496.20p -2.69%

Entain (ENT) 577.80p -2.67%

St James's Place (STJ) 1,257.50p -2.67%

Smith & Nephew (SN.) 1,160.00p -2.56%

Smurfit Westrock (DI) (SWR) 2,941.00p -2.42%

FTSE 250 - Risers

Computacenter (CCC) 3,682.00p 10.17%

Harbour Energy (HBR) 294.80p 2.64%

Ceres Power Holdings (CWR) 488.20p 2.39%

The Renewables Infrastructure Group Limited (TRIG) 68.70p 1.63%

Ithaca Energy (ITH) 270.50p 1.61%

Raspberry PI Holdings (RPI) 609.50p 1.29%

Softcat (SCT) 1,345.00p 1.13%

Greencoat UK Wind (UKW) 99.40p 1.12%

HICL Infrastructure (HICL) 126.00p 0.96%

Man Group (EMG) 248.00p 0.90%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 857.50p -5.41%

Genuit Group (GEN) 276.60p -5.09%

Pagegroup (PAGE) 127.80p -4.70%

SSP Group (SSPG) 173.70p -4.40%

Aston Martin Lagonda Global Holdings (AML) 42.88p -4.20%

Ibstock (IBST) 102.10p -4.04%

Harworth Group (HWG) 132.40p -3.77%

Renishaw (RSW) 4,394.00p -3.60%

Hikma Pharmaceuticals (HIK) 1,356.50p -3.39%

Watches of Switzerland Group (WOSG) 508.50p -3.33%