London midday: FTSE extends losses amid Middle East escalation

(Sharecast News) - London stocks were a sea of red by midday on Tuesday as the escalating conflict in the Middle East rattled markets, with Chancellor Reeves due to deliver her Spring Statement.

The FTSE 100 was down 2.6% at 10,495.92, extending losses, while Brent crude was up 9.3% at $84.94 a barrel, hitting its highest level since July 2024.

All eyes remained firmly on developments in the Middle East, as Israel launched new strikes on Beirut and Tehran, with Israeli defence minister Israel Katz authorising the IDF to advance and take control of "additional strategic positions" in Lebanon.

Meanwhile, US President Donald Trump said during a Medal of Honor ceremony at the White House that he will do "whatever it takes" in Iran and that the conflict could last a month or longer.

"We're already substantially ahead of our time projections. But whatever the time is, it's OK," he said. "Right from the beginning, we projected four to five weeks, but we have capability to go far longer than that."

Susannah Streeter, chief investment strategist at Wealth Club, said: "Downbeat sentiment is pervading equity markets as the conflict in the Middle East escalates, with global repercussions. London's FTSE 100 has fallen deeper into the red as the war widens and companies assess the impact of severe disruption across the region on their operations.

"Airline stocks have sunk further, as the cost of aviation fuel looks set to rise, key routes remain closed, and travellers' confidence takes a significant hit. Mining stocks have fallen back as the edge has been taken off demand for precious metals. The dollar has strengthened, making gold and silver less attractive to buyers in other currencies. The greenback has firmed up amid expectations that the Fed might keep interest rates higher for longer to offset inflationary risks the conflict has sparked.

"Energy costs continue to mount as Lebanon has been drawn into the conflict and Gulf states are still reeling from a barrage of Iranian strikes. Iran is retaliating to attacks from Israel and the US and is now threatening to set fire to ships using the crucial Strait of Hormuz. Given that it's an essential route for around a fifth of global oil and gas supplies, this has sent energy prices even higher."

On home shores, Reeves is due to deliver the Spring Statement around 1230 GMT, while the Office for Budget Responsibility will publish new forecasts for the economy and public finances.

Richard Hunter, head of markets at Interactive Investor, said: "What had been hailed as a quiet spring statement from the Chancellor may now have to include some reaction to the Iranian conflict, although OBR forecasts are likely to remain the main area of focus."

In equity markets, even oil giants BP and Shell couldn't manage any gains despite Brent crude topping $80 a barrel.

Testing and inspection specialist Intertek tumbled even as it forecast further earnings growth following a jump in annual sales and profits. RBC Capital Markets said there was "too much for the bears to get their teeth stuck into".

In particular, the broker noted a possible marked deceleration in organic growth in November and December, and higher-than-expected restructuring costs.

BA and Iberia owner IAG and budget airline easyJet flew lower, while heavily-weighted miners lost ground as copper prices fell, with Antofagasta, Anglo American and Glencore all down.

Precious metals miner Fresnillo lost its shine as gold prices fell, with investors taking profits on the yellow metal despite the escalation in the Middle East.

Banks remained under pressure, with HSBC, Barclays and NatWest all weaker.

Morgan Advanced Materials, Inchcape, Aberdeen and IWG all fell after results, along with bakery chain Greggs.

On the upside, AJ Bell rallied after UBS upgraded the shares to 'buy' from 'neutral', saying that slower earnings per share growth is now fully reflected in the price.

Keller Group shot higher as the geotechnical specialist contractor hailed a record full-year performance, ahead of expectations, hiked its dividend and announced a further �100m share buyback.

IG Group was also a touch firmer after UBS upgraded the stock to 'buy' from 'neutral' and hiked the price target to 1,600p from 1,250p.

Market Movers

FTSE 100 (UKX) 10,495.92 -2.64%

FTSE 250 (MCX) 22,784.66 -2.73%

techMARK (TASX) 5,936.22 -1.66%

FTSE 100 - Risers

Smith & Nephew (SN.) 1,364.00p 4.56%

Flutter Entertainment (DI) (FLTR) 7,856.00p 1.47%

Hikma Pharmaceuticals (HIK) 1,260.00p 1.20%

Pearson (PSON) 960.00p 0.48%

Entain (ENT) 555.80p 0.47%

Relx plc (REL) 2,579.00p 0.16%

RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 98.64p 0.00%

Beazley (BEZ) 1,290.00p -0.08%

Schroders (SDR) 585.50p -0.17%

BP (BP.) 488.35p -0.19%

FTSE 100 - Fallers

Intertek Group (ITRK) 4,092.00p -12.86%

International Consolidated Airlines Group SA (CDI) (IAG) 373.80p -6.99%

Antofagasta (ANTO) 3,881.00p -6.80%

Anglo American (AAL) 3,377.00p -5.72%

Airtel Africa (AAF) 340.00p -5.51%

Metlen Energy & Metals (MTLN) 33.58p -5.42%

Fresnillo (FRES) 3,886.00p -5.24%

Rolls-Royce Holdings (RR.) 1,287.00p -4.95%

HSBC Holdings (HSBA) 1,271.00p -4.58%

Rentokil Initial (RTO) 432.50p -4.44%

FTSE 250 - Risers

Keller Group (KLR) 2,135.00p 6.50%

AJ Bell (AJB) 438.80p 2.28%

Ithaca Energy (ITH) 238.50p 1.71%

IG Group Holdings (IGG) 1,346.00p 1.36%

Plus500 Ltd (DI) (PLUS) 4,110.00p 1.23%

Diversified Energy Company (DI) (DEC) 1,060.00p 1.15%

Ocado Group (OCDO) 202.80p 0.90%

Bytes Technology Group (BYIT) 301.40p 0.87%

Greggs (GRG) 1,585.00p 0.57%

Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 309.00p 0.49%

FTSE 250 - Fallers

Morgan Advanced Materials (MGAM) 208.00p -10.92%

Inchcape (INCH) 780.50p -10.29%

Abrdn (ABDN) 202.60p -8.64%

Johnson Service Group (JSG) 133.40p -6.94%

International Workplace Group (IWG) 199.70p -6.62%

Raspberry PI Holdings (RPI) 350.10p -6.59%

Schroder Asian Total Return Investment Company (ATR) 614.00p -6.40%

Pan African Resources (PAF) 171.00p -6.35%

BlackRock World Mining Trust (BRWM) 963.00p -6.33%

Vesuvius (VSVS) 455.60p -6.22%