London midday: FTSE extends losses after PMI, amid Hormuz standoff

(Sharecast News) - London stocks had fallen further by midday on Thursday as oil prices rose amid the standoff between the US and Iran over the Strait of Hormuz, and as the latest UK PMI print highlighted concerns about inflation.

The FTSE 100 was down 1% at 10,377.27, while Brent crude was up 1.5% at $103.48 a barrel.

Investors were mulling a report that the US military had intercepted at least three Iranian-flagged tankers in Asian waters. According to Reuters, citing shipping and security sources on Wednesday, the US was redirecting them away from their positions near India, Malaysia and Sri Lanka.

Meanwhile, Donald Trump told Fox News there was "no time frame" for ending the war in Iran. The US president said it was "not true" that he wanted to end the war before the US midterm elections in November. There is "no time pressure" on the ceasefire with Iran, he said.

"People say I want to get it over because of the midterms, not true," Trump told Fox News.

He told the New York Post that "good news" about the second round of talks with Iran could be coming as soon as Friday.

Kathleen Brooks, research director at XTB, said: "The struggle between Iran and the US is now focusing on trade, and who controls the Strait of Hormuz. This suggests that oil prices will remain elevated, and it makes it hard for stock indices to sustain record highs. Before news broke about the US interception of tankers in Asian waters, the Nikkei and the South Korean Kospi both rose to record highs, following the US after the S&P 500 and the Nasdaq had done the same earlier on Wednesday.

"Markets have been trading on optimism that the US ceasefire would hold and that the Strait of Hormuz would reopen, as we move towards the end of the week, this optimism could be in short supply. The situation in the Strait of Hormuz is not sustainable, and if there is no improvement by the end of the week, volatility could spike once more."

On home shores, a survey showed activity in the private sector picked up in April, while cost inflation saw its biggest month-on-month jump in 30 years as customers brought orders forward amid expectations of price hikes.

The S&P Global flash PMI composite output index rose to 52.0 this month from 50.3 in March. A reading above 50.0 indicates expansion, while a reading below signals contraction.

The services PMI business activity index printed at 52.0 in April, up from 50.5 the month before, while the PMI for manufacturing was 51.8 versus 49.2 in March.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the economy had gathered some renewed momentum in April after the initial impact of the Iran war caused growth to stall in March, but the upturn came with a catch.

"The improved rate of expansion is in part a reflection of a short-term boost from a rush to secure purchases ahead of feared price rises and supply shortages linked to the war," he said.

"Prices have spiked higher at a rate not previously seen by the survey outside of the pandemic, suggesting inflation could rise more than many forecasters have been anticipating. Prices are rising not just because of surging energy costs, but also due to increases in charges levied for a wide variety of goods and services, with price hikes often stoked by supply concerns. The number of supply delays reported has jumped to the highest on record if the pandemic is excluded.

"Business confidence and employment have also been dragged lower by the ongoing conflict, boding ill for growth to weaken in the coming months just as price pressures intensify."

Elsewhere, figures from the Office for National Statistics showed that public borrowing fell in the year to March, broadly in line with the fiscal watchdog's forecast.

Borrowing was �12.6bn last month, �1.4bn less than in March 2025 and the lowest March borrowing since 2022.

That meant that for the financial year ending March 2026, borrowing was estimated to have fallen by 13.1% at �132bn, narrowly below the Office for Budget Responsibility's forecast for �132.7bn.

The latest UK consumer sentiment data from BRC-Opinium was also in focus.

In equity markets, Sainsbury's slumped as the supermarket retailer cautioned that full-year profits could fall this year amid an uncertain outlook due to the impact of the war on Iran. Tesco was also in the red.

In the year to 28 February 2026, retail underlying operating profit nudged down 1.1% to �1.0bn, in line with guidance. This reflects significant operating cost inflation and investment in value in a more competitive market, the retailer said.

For the current financial year, total underlying operating profit of between �975m and �1.075bn is expected as the duration and extent of impacts from the Middle East conflict are "very uncertain".

Travel outlet retailer WH Smith also fell sharply as it suspended its dividend and said it was taking a cautious view of future trade due to the war on Iran which had hit airline fuel supplies and passenger numbers.

The group now expects to deliver FY26 headline group profit before tax and non-underlying items of �90m to �105m. Half-year profits on the same basis fell to �3m from �21m with its UK operations hit by refurbishment of airport stores.

Man Group fell as it said first-quarter assets under management were broadly flat at $228.7bn after a single client pulled $6.1bn from one strategy.

Legal & General, Fresnillo and Rightmove all lost ground as they traded without entitlement to the dividend.

On the upside, LSEG rallied as it said full-year revenue growth was expected to be in the upper half of the guidance range of 6.5% to 7.5%.

Domino's Pizza rose as it backed its earnings expectations for the year and hailed an encouraging first quarter.

Hikma gained as it reiterated full-year guidance despite a rise in costs following the outbreak of war in the Middle East.

Market Movers

FTSE 100 (UKX) 10,377.27 -0.95%

FTSE 250 (MCX) 22,709.29 -1.14%

techMARK (TASX) 5,872.35 -0.92%

FTSE 100 - Risers

London Stock Exchange Group (LSEG) 9,948.00p 2.07%

Airtel Africa (AAF) 367.00p 1.61%

Reckitt Benckiser Group (RKT) 4,755.00p 1.53%

Haleon (HLN) 351.00p 1.47%

SSE (SSE) 2,646.50p 0.88%

Unilever (ULVR) 4,228.50p 0.77%

Metlen Energy & Metals (MTLN) 34.05p 0.68%

British American Tobacco (BATS) 4,159.00p 0.39%

BT Group (BT.A) 217.45p 0.35%

Shell (SHEL) 3,309.50p 0.30%

FTSE 100 - Fallers

Fresnillo (FRES) 3,425.00p -6.64%

Legal & General Group (LGEN) 252.25p -6.11%

Entain (ENT) 561.00p -5.87%

Sainsbury (J) (SBRY) 333.80p -5.52%

3i Group (III) 2,674.50p -3.55%

Experian (EXPN) 2,799.00p -3.16%

Rightmove (RMV) 438.20p -3.12%

Tesco (TSCO) 480.00p -3.02%

Marks & Spencer Group (MKS) 339.00p -2.78%

BAE Systems (BA.) 2,056.50p -2.67%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 198.60p 8.29%

Hikma Pharmaceuticals (HIK) 1,389.50p 4.69%

Ithaca Energy (ITH) 273.70p 3.78%

Diversified Energy Company (DI) (DEC) 1,160.00p 2.29%

Harbour Energy (HBR) 290.80p 1.61%

Hilton Food Group (HFG) 542.50p 1.59%

Telecom Plus (TEP) 1,426.00p 1.28%

Energean (ENOG) 859.50p 1.12%

VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 476.00p 1.06%

Baillie Gifford US Growth Trust (USA) 311.00p 0.97%

FTSE 250 - Fallers

WH Smith (SMWH) 559.50p -10.82%

Man Group (EMG) 246.00p -7.32%

SSP Group (SSPG) 174.70p -5.11%

Pan African Resources (PAF) 146.72p -4.93%

Ocado Group (OCDO) 208.40p -4.59%

Twentyfour Income Fund Limited Ord Red (TFIF) 106.40p -4.14%

Wickes Group (WIX) 210.50p -4.11%

Close Brothers Group (CBG) 461.00p -3.68%

Hochschild Mining (HOC) 644.00p -3.53%

Derwent London (DLN) 1,724.00p -3.47%