London midday: FTSE stays down as Brent breaches $105 a barrel, bonds sell off

(Sharecast News) - London stocks were still weaker by midday on Thursday as oil prices surged and bonds sold off.

The FTSE 100 was down 0.6% at 10,393.99. Meanwhile, Brent crude was up 5.1% at $105.27 a barrel and West Texas Intermediate was 5% higher at $92.77 amid concerns about escalating tensions between the US and Iran following reports that Donald Trump is preparing "massive" strikes on Iran before the US mid-term election, and after Houthi attacks on Saudi airports.

According to Axios, the Pentagon instructed US Central Command several days ago to conclude preparations for resuming major combat operations in Iran.

It was understood that the directive didn't include a specific date for launching strikes, and Trump hasn't made any final decisions. However, US and Israeli sources said it could happen before the US midterm elections and possibly the Israeli elections a week earlier.

Investors were also mulling attacks by Yemen-backed Houthis on two Saudi airports - Abha International Airport and King Khalid International Airport in Riyadh - which killed three and injured 36 people.

Also boosting oil prices was news that tropical storm Isaias was set to reach the US Gulf Coast by Friday.

In bond markets, the yield on the 30-year gilt was up six basis points at 6.047% and the yield on the 10-year gilt was seven basis points higher at 5.523%.

Dan Coatsworth, head of markets at AJ Bell, said: "A sharp jump in the price of oil weighed on financial markets, leaving investors with no choice but to stare the inflation monster in the eyes.

"The higher the oil price goes, the more volatility to expect on financial markets. Bond investors have made it clear they are concerned by the prospect of rising inflation feeding into higher interest rates and potentially economic setbacks. Equity investors have been relatively relaxed versus bond investors thanks to positive corporate news flow keeping spirits high. But that situation might not be sustainable if higher costs start to crimp corporate profits.

"Just as the weather is starting to turn colder as autumn sets in, so does the prospect of a chill starting to bite equity markets unless oil goes into reverse."

Investors were digesting the latest residential market survey from the Royal Institution of Chartered Surveyors, which showed the housing market remained under pressure in September amid the prospect of higher interest rates.

The headline house price net balance slipped to -32% from -28% in August, breaking a run of four consecutive months in which the indicator had become gradually less negative.

The balance for new buyer enquiries was -22% last month, down slightly on August's -18%. Still, it remained comfortably above the recent low of -41% recorded six months ago, highlighting that although demand has softened slightly, current conditions are still less subdued than earlier in the year.

The balance for near-term house price expectations at the national level stood at -24%.

The net balance for agreed sales edged down to -18% in September from -16% in August, but remained less negative than the three-month average of -25%.

Looking ahead, near-term sales expectations softened slightly, with the net balance easing to -6% from -3% previously. "Although this points to a somewhat more cautious outlook over the next three months, the overall picture has not shifted significantly as yet," Rics said.

RICS head of market research Tarrant Parsons said: "A renewed rise in interest rate expectations has created a fresh headwind for the housing market, with buyers becoming a little more cautious and sales activity losing some momentum."

In equity markets, Standard Life slumped after investment company Aberdeen offloaded half of its stake in the savings and retirement specialist for £436m through a discounted share placing.

Shares in student accommodation group Unite slid after the company reiterated full-year earnings guidance but reported lower property valuations.

On the upside, supermarket chain Tesco rallied as it lifted the lower end of annual guidance and its share buyback programme after interim profits jumped 6.5% to £1.78bn.

The company now expects adjusted operating profit of between £3.15bn and £3.30bn, compared with the £3.0bn to £3.3bn range outlined in April. It also increased its share buyback to £950m from £750m.

Imperial Brands gained after saying it remained on track to meet fullyear FY26 guidance across all key metrics and lifted shareholder returns with a fresh £1.5bn buyback for FY27, following the completion of its £1.45bn repurchase for the current year.

Market Movers

FTSE 100 (UKX) 10,393.99 -0.62%

FTSE 250 (MCX) 23,864.13 -0.72%

techMARK (TASX) 6,111.22 -0.75%

FTSE 100 - Risers

Tesco (TSCO) 499.60p 5.53%

IG Group Holdings (IGG) 973.50p 3.40%

Imperial Brands (IMB) 2,561.00p 3.27%

BP (BP.) 580.00p 3.26%

Pearson (PSON) 1,272.50p 2.79%

Relx plc (REL) 2,656.00p 2.46%

Sainsbury (J) (SBRY) 335.30p 2.38%

The Sage Group (SGE) 1,042.00p 2.25%

Shell (SHEL) 3,724.00p 2.08%

London Stock Exchange Group (LSEG) 8,470.00p 1.97%

FTSE 100 - Fallers

Standard Life (SDLF) 829.50p -4.65%

Melrose Industries (MRO) 434.20p -3.76%

Rolls-Royce Holdings (RR.) 1,362.20p -3.42%

Metlen Energy & Metals (MTLN) 47.38p -3.28%

Lion Finance Group (BGEO) 12,470.00p -3.19%

International Consolidated Airlines Group SA (CDI) (IAG) 418.50p -3.10%

Antofagasta (ANTO) 3,599.00p -2.79%

HSBC Holdings (HSBA) 1,372.20p -2.67%

Land Securities Group (LAND) 598.00p -2.61%

Standard Chartered (STAN) 2,100.00p -2.60%

FTSE 250 - Risers

Hays (HAS) 63.90p 3.40%

Harbour Energy (HBR) 277.20p 3.13%

Bridgepoint Group (Reg S) (BPT) 376.60p 3.12%

Avon Technologies (AVON) 2,225.00p 2.77%

Man Group (EMG) 335.20p 2.57%

Trustpilot Group (TRST) 237.60p 2.34%

Bloomsbury Publishing (BMY) 656.00p 2.17%

ASOS (ASC) 462.00p 2.11%

Trainline (TRN) 202.40p 2.07%

Rightmove (RMV) 470.00p 1.69%

FTSE 250 - Fallers

Unite Group (UTG) 417.60p -6.27%

Amaroq Ltd. Npv (DI) (AMRQ) 118.75p -3.46%

Genuit Group (GEN) 269.20p -3.36%

SSP Group (SSPG) 184.70p -3.30%

Watches of Switzerland Group (WOSG) 657.00p -3.24%

Wizz Air Holdings (WIZZ) 988.50p -3.16%

Foresight Group Holdings Limited NPV (FSG) 434.00p -3.13%

Vistry Group (VTY) 218.00p -2.94%

Barr (A.G.) (BAG) 544.00p -2.86%

TBC Bank Group (TBCG) 4,824.00p -2.78%