(Sharecast News) - London stocks were still weaker by midday on Tuesday as surging oil prices raised rate hike expectations, after Donald Trump said the US had reinstated the naval blockade on the Strait of Hormuz, and as investors eyed a key US inflation reading and bank earnings.
The FTSE 100 was down 0.4% at 10,455.57, while Brent crude was up 4.4% at $86.94 a barrel and West Texas Intermediate was 3.3% higher at $80.71.
In a post on Truth Social on Monday, the US president wrote: "The Hormuz Strait is OPEN, and will remain OPEN, with or without Iran. We are reinstating the IRANIAN BLOCKADE, so named because it is only stopping Iran's ships or customers from entering or leaving."
Trump said all other countries will have "fair and open" use of the Strait, through which around 20% of the world's oil supply is normally transported.
"The U.S.A. will be, from this point forward, known as 'THE GUARDIAN OF THE HORMUZ STRAIT,' but as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20% on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World."
Investors were also mulling another round of military strikes by the US against Iran, confirmed by the US Central Command. Centcom said that during a five-hour mission, US forces struck military targets across Iran including Bushehr, Chah Bahar, Jask, Konarak, Abu Musa, and Bandar Abbas.
Across the pond, earnings season kicked off in earnest, with quarterly results from JPMorgan, Wells Fargo and Bank of America out, while Citigroup and Goldman Sachs numbers were also due later.
Market participants will also eye new Federal Reserve chair Kevin Warsh's testimony to Congress and the US consumer price index for June.
Kathleen Brooks, research director at XTB, said: "Geopolitics and a heavy slate of event risks collide today, as investors grapple with rising geopolitical tensions, the June US CPI report, new Fed chair Kevin Warsh's testimony to Congress, alongside some key banking earnings.
"The oil price has risen another 3% this morning and is currently above $86 per barrel for Brent crude. It is higher by nearly 9% in the past five days and it does not look like the oil price rise will slow down any time soon. Risk aversion is high on Tuesday, and European stocks are lower, after US equities sunk at the start of the week, led lower by large declines for SanDisk, Marvell and Arm Holdings, and bond yields surged."
She added that there is now a full interest rate hike priced in from the Bank of England by year end. "The market also sees the Fed hiking rates this year, there is a 40% chance of a hike at this month's Fed meeting," she said.
In equity markets, BP and Shell gushed higher in tandem with oil prices. BP was also in focus as it confirmed that higher commodity prices were set to boost second-quarter earnings, despite a fall in upstream production.
Genus surged as the animal genetics company said it expects annual earnings to be moderately above expectations after a strong second half in Asia and Latin America that more than offset weaker conditions in North America.
Rank Group also gained as it hailed "strong" full-year underlying operating profit, ahead of expectations.
Watches of Switzerland nudged up as it posted record full-year profit and revenue, ahead of its previous guidance and market expectations. The shares surged on Monday following a Reuters report the company has held talks in recent months over potential offers to take the luxury watch retailer private.
Airlines were under the cosh amid the prospect of higher fuel costs, with BA and Iberia owner IAG and Wizz Air both lower.
Pearson was hit by a downgrade to 'neutral' from 'overweight' at JPMorgan. The bank said its forecasts and price target now only imply modest upside and it sees better value elsewhere.
Market Movers
FTSE 100 (UKX) 10,455.57 -0.41%
FTSE 250 (MCX) 23,228.41 -0.72%
techMARK (TASX) 5,914.81 -0.59%
FTSE 100 - Risers
BP (BP.) 516.20p 2.77%
Centrica (CNA) 175.65p 2.33%
Shell (SHEL) 3,158.00p 1.69%
Glencore (GLEN) 524.40p 1.57%
Rio Tinto (RIO) 6,842.00p 1.50%
Anglo American (AAL) 3,623.00p 1.12%
Airtel Africa (AAF) 341.20p 1.01%
IMI (IMI) 2,828.00p 1.00%
Vodafone Group (VOD) 116.55p 0.73%
Abrdn (ABDN) 250.40p 0.72%
FTSE 100 - Fallers
Flutter Entertainment (DI) (FLTR) 8,322.00p -4.83%
InterContinental Hotels Group (IHG) 157.45p -3.61%
3i Group (III) 2,616.00p -2.93%
Melrose Industries (MRO) 457.30p -2.81%
Pearson (PSON) 1,280.50p -2.81%
Relx plc (REL) 2,412.00p -2.62%
Informa (INF) 868.20p -2.60%
Barratt Redrow (BTRW) 277.60p -2.42%
International Consolidated Airlines Group SA (CDI) (IAG) 448.60p -2.41%
Persimmon (PSN) 1,042.50p -2.25%
FTSE 250 - Risers
Genus (GNS) 2,122.00p 4.62%
Rank Group (RNK) 98.40p 4.13%
Ithaca Energy (ITH) 238.50p 3.70%
Clarkson (CKN) 4,564.00p 2.24%
Harbour Energy (HBR) 229.20p 2.14%
Syncona Limited NPV (SYNC) 109.00p 2.06%
Patria Private Equity Trust (PPET) 624.00p 1.30%
The Renewables Infrastructure Group Limited (TRIG) 72.90p 1.11%
RS Group (RS1) 634.50p 1.04%
Raspberry PI Holdings (RPI) 810.50p 0.97%
FTSE 250 - Fallers
Ceres Power Holdings (CWR) 428.60p -4.67%
Shawbrook Group (SHAW) 334.00p -3.88%
Workspace Group (WKP) 339.00p -3.69%
IntegraFin Holding (IHP) 366.50p -2.92%
WPP (WPP) 275.60p -2.76%
Rightmove (RMV) 427.50p -2.64%
Hikma Pharmaceuticals (HIK) 1,535.00p -2.60%
Baltic Classifieds Group (BCG) 173.50p -2.59%
Wizz Air Holdings (WIZZ) 1,098.00p -2.49%
Bridgepoint Group (Reg S) (BPT) 284.40p -2.47%
24.91 (0.24%)
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