(Sharecast News) - London stocks had nudged into the black by midday on Monday, while oil prices were up after Israel and Iran exchanged strikes, threatening the ceasefire between the two.
The FTSE 100 was up 0.1% at 10,375.84, reversing earlier small losses, while Brent crude was 3.2% higher at $96.09 a barrel.
Investors were mulling the latest developments in the Middle East conflict as Israel launched airstrikes on central and western Iran on Monday after Tehran fired ballistic missiles at northern Israel on Sunday. Iran's attack followed Israeli strikes on Beirut, and this marked the first exchange of fire between the two since the ceasefire in April.
Explaining why the FTSE 100 was faring relatively well in the face of heavy losses in the US and Asia, Neil Wilson, UK investor strategist at Saxo Markets, said: "If you don't ramp 80% in five months then you can't slump 10% in a day. Rising Iran conflict risks, rising Fed hike risks, rising AI bloat risks mean it's risk off but the FTSE 100 is holding up ok because losses are concentrated around AI and tech and the index has not enjoyed a monster rally amid soaring earnings growth expectations.
"Stocks are down because things have got worse again in the Middle East over the weekend and rising bets for the Federal Reserve to raise rates this year following Friday's stronger-than-expected US jobs report. Israel and Iran traded airstrikes, testing the fragile US-Iran ceasefire and knocking confidence in an already fragile market.
"A selloff in tech names is broadening. South Korea led the losses in Asia with a decline of more than 8% for the Kospi as its two heavyweights dropped amid a broad selloff in anything related AI hardware and semis. Tech names are bearing the brunt after Friday's sharp selloff in the Nasdaq, which plunged over 4% for its worst day since last April's liberation day tariffs.
"The trigger was a stronger-than-expected payroll employment report that backed up what I've saying about resilience in the US labour market - the market was underestimating how soon the Fed could go ahead with raising interest rates.
"Some of the froth is coming off the top of the AI trade here. AI and semiconductor-linked stocks were sold but this was not a broad selloff with consumer staples, healthcare, utilities, real estate and financials up on Friday."
Wilson said we are not seeing such a big move in European/UK bourses "because they're not stuffed full of AI-related tech names".
In equity markets, British American Tobacco was the top gainer on the FTSE 100. Dan Coatsworth, head of markets at AJ Bell, said the stock was in demand "as investors popped some defensive-style names into their portfolio in a 'just in case' scenario should markets weaken further".
Tate & Lyle surged after agreeing to be taken over by US peer Ingredion in a 2.7bn deal. The ingredients firm is being acquired for 595p per share in cash and dividends of up to 20p share. The deal values the business at 2.7bn, with an implied enterprise value of 3.7bn.
Energy giants BP and Shell gushed higher in tandem with oil prices, along with Ithaca Energy.
TP Icap rallied after Deutsche Bank initiated coverage of the interdealer broker at 'buy' with a 415p price target, saying it was "more than a cyclical broker".
Scottish Mortgage Investment Trust was under pressure due to its exposure to the US technology sector.
Market Movers
FTSE 100 (UKX) 10,375.84 0.08%
FTSE 250 (MCX) 22,997.92 -0.27%
techMARK (TASX) 5,988.20 -0.28%
FTSE 100 - Risers
British American Tobacco (BATS) 4,516.00p 2.59%
BAE Systems (BA.) 1,956.50p 1.42%
Hiscox Limited (DI) (HSX) 1,737.00p 1.22%
BT Group (BT.A) 203.80p 1.14%
Autotrader Group (AUTO) 472.30p 1.02%
Flutter Entertainment (DI) (FLTR) 7,598.00p 0.98%
Metlen Energy & Metals (MTLN) 39.93p 0.88%
Shell (SHEL) 3,256.00p 0.88%
BP (BP.) 550.70p 0.86%
Imperial Brands (IMB) 2,785.00p 0.83%
FTSE 100 - Fallers
Scottish Mortgage Inv Trust (SMT) 1,433.00p -2.91%
Marks & Spencer Group (MKS) 356.40p -2.27%
Fresnillo (FRES) 2,917.00p -2.18%
Barratt Redrow (BTRW) 254.30p -1.85%
Spirax Group (SPX) 6,705.00p -1.76%
International Consolidated Airlines Group SA (CDI) (IAG) 412.80p -1.73%
Severn Trent (SVT) 2,916.00p -1.69%
Melrose Industries (MRO) 459.30p -1.58%
Berkeley Group Holdings (The) (BKG) 3,432.00p -1.55%
United Utilities Group (UU.) 1,305.00p -1.51%
FTSE 250 - Risers
Tate & Lyle (TATE) 562.00p 14.37%
Ithaca Energy (ITH) 256.80p 7.54%
Hays (HAS) 36.32p 4.15%
TP Icap Group (TCAP) 323.20p 2.09%
Chemring Group (CHG) 509.50p 2.00%
Grainger (GRI) 153.60p 1.99%
Harbour Energy (HBR) 274.20p 1.93%
AO World (AO.) 91.30p 1.90%
Balfour Beatty (BBY) 827.50p 1.85%
North Atlantic Smaller Companies Inv Trust (NAS) 392.00p 1.82%
FTSE 250 - Fallers
Hochschild Mining (HOC) 520.50p -3.51%
IP Group (IPO) 64.10p -3.17%
XP Power Ltd. (DI) (XPP) 1,730.00p -3.03%
Kier Group (KIE) 198.10p -2.93%
Vistry Group (VTY) 252.60p -2.84%
The Schiehallion Fund Limited NPV (MNTN) 2.11p -2.76%
Pacific Horizon Inv Trust (PHI) 1,094.00p -2.67%
Ceres Power Holdings (CWR) 659.00p -2.59%
Polar Capital Technology Trust (PCT) 665.00p -2.56%
Discoverie Group (DSCV) 700.00p -2.24%
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