(Sharecast News) - London stocks had tumbled by midday on Wednesday as oil prices surged after Donald Trump said the ceasefire with Iran was over following an exchange of strikes overnight.
The FTSE 100 was down 1.7% at 10,489.70, while Brent crude was up 5.1% at $77.93 a barrel and West Texas Intermediate was 5% higher at $73.96.
Stocks extended earlier losses and oil prices took another leg higher after the US president told reporters at the Nato summit in Ankara, Turkey, that he thought the ceasefire was over. "I don't want to deal with them anymore," Trump said, adding that Iranian leaders are "scum".
"They're scum, they're sick people. They're led by sick people. And they're vicious, violent people and if they had a nuclear weapon they'd use it.
"As far as I'm concerned, it's over." Trump said he would let US negotiators continue to talk with Tehran but insisted it was "a waste of time" dealing with the Iranians, accusing them of being liars.
Oil prices were already up and stocks down at the open on news the US had launched "a series of powerful" strikes against Iran on Tuesday after three oil tankers were attacked in the Strait of Hormuz.
In a post on X, the US Central Command said: "Strikes are in response to Iranian attacks on three commercial vessels that were transiting the Strait of Hormuz. Iran's demonstrated aggression was unwarranted, dangerous, and a clear violation of the ceasefire."
Centcom later confirmed that more than 80 targets had been hit during the strikes.
"US forces struck Iranian air defence systems, command and control networks, coastal radar sites, anti-ship missile capabilities, and more than 60 Islamic Revolutionary Guard Corps small boats in and near the strait (of Hormuz) to degrade Iran's ability to continue attacking international commerce flowing through the international trade corridor," it said in a statement.
Also in response to the attacks in the Strait of Hormuz, the US has revoked a waiver that allowed Iran to sell oil. The waiver was issued as part of the interim peace deal between the two.
Neil Wilson, UK investor strategist at Saxo Markets, said: "Sentiment was already wobbling at the open after the US and Iran traded military strikes but Trump's remarks set sparks flying - the comments underscored fears that we could see further escalation and a return to pre-MOU conditions...for what it's worth I don't think this is the base case as a) Trump is wont to throw around threats and b) both sides need to return to a kind of hazy pre-war 'normality'.
"But it clearly seems the risk of a total breakdown in negotiations has increased and markets are reflecting this fresh dynamic. Rotation out of semis is stalling and becoming more like a broader downturn for risk assets."
Kathleen Brooks, research director at XTB, said: "This is a fluid situation, and we are waiting to hear about how Iran responds to Donald Trump's comments. The US has already revoked the waiver on Iranian oil sanctions. At this stage it does not mean that Iran can't sell its oil, if it finds willing buyers, which it is likely to do, it would have to use non-US dollar settlement for payments, but again, this should not be a problem.
"For now, this is one reason why the oil price has not surged 10% plus today. For the Brent crude oil price to extend gains above $80 per barrel, we would need to see another US naval blockade of the Strait of Hormuz, which would stop Iran from selling its oil and cause a major escalation in tensions."
Unsurprisingly, BP and Shell were the top gainers on the FTSE 100 amid the surging oil price.
On downside, Vistry tumbled as the housebuilder warned it will post a first-half loss and announced the resignation of its chief financial officer. Peers Barratt, Persimmon and Travis Perkins also dropped.
BA and Iberia owner IAG and Wizz Air flew lower as higher oil prices raised concerns about fuel costs.
Severn Trent lost ground after water regulator Ofwat said it had found "serious failings" in the company's duties to deal effectively with wastewater and sewage, but decided not to fine the group as it has taken steps to address its failings.
Market Movers
FTSE 100 (UKX) 10,489.70 -1.65%
FTSE 250 (MCX) 22,890.02 -2.09%
techMARK (TASX) 5,875.63 -1.94%
FTSE 100 - Risers
BP (BP.) 490.70p 3.15%
Shell (SHEL) 3,068.00p 1.88%
Centrica (CNA) 170.75p 0.59%
Admiral Group (ADM) 3,634.00p 0.39%
AstraZeneca (AZN) 14,162.00p 0.38%
Tesco (TSCO) 469.00p 0.09%
Schroders (SDR) 586.50p 0.00%
Intertek Group (ITRK) 5,810.00p 0.00%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 98.64p 0.00%
Beazley (BEZ) 1,288.00p -0.04%
FTSE 100 - Fallers
Babcock International Group (BAB) 1,028.50p -4.68%
Standard Chartered (STAN) 2,038.00p -4.28%
International Consolidated Airlines Group SA (CDI) (IAG) 459.10p -3.92%
Antofagasta (ANTO) 3,620.00p -3.87%
Barratt Redrow (BTRW) 272.70p -3.81%
Fresnillo (FRES) 2,620.00p -3.75%
Kingfisher (KGF) 269.50p -3.68%
Rolls-Royce Holdings (RR.) 1,397.00p -3.58%
Games Workshop Group (GAW) 20,060.00p -3.56%
Persimmon (PSN) 1,009.50p -3.54%
FTSE 250 - Risers
RIT Capital Partners (RCP) 2,380.00p 4.40%
Harbour Energy (HBR) 225.00p 4.17%
Diversified Energy Company (DI) (DEC) 1,060.00p 3.72%
Ithaca Energy (ITH) 229.60p 2.69%
Herald Investment Trust (HRI) 3,020.00p 1.85%
Keller Group (KLR) 3,310.00p 1.41%
Fidelity China Special Situations (FCSS) 258.00p 1.38%
GCP Infrastructure Investments Ltd (GCP) 83.10p 0.85%
SDCL Efficiency Income Trust (SEIT) 37.50p 0.81%
Energean (ENOG) 707.00p 0.57%
FTSE 250 - Fallers
Breedon Group (BREE) 285.00p -8.06%
Vistry Group (VTY) 234.20p -7.69%
Ceres Power Holdings (CWR) 459.00p -7.08%
Oxford Nanopore Technologies (ONT) 112.80p -6.33%
Trustpilot Group (TRST) 257.80p -6.03%
Raspberry PI Holdings (RPI) 812.75p -5.88%
XP Power Ltd. (DI) (XPP) 1,686.00p -5.81%
Travis Perkins (TPK) 519.00p -5.56%
Volution Group (FAN) 570.00p -5.32%
Wizz Air Holdings (WIZZ) 1,127.00p -5.22%
196.46 (1.84%)
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