London open: FTSE falls amid Hormuz standoff; retail sales in focus

(Sharecast News) - London stocks fell in early trade on Friday amid ongoing concerns about the US-Iran standoff in the Strait of Hormuz, as investors digested a surprise jump in UK retail sales.

At 0825 BST, the FTSE 100 was down 0.4% at 10,418.81, while Brent crude was 0.8% higher at $105.89 a barrel.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Equity markets are sending mixed signals this morning, with UK markets opening lower while US futures edge higher as investors weigh fragile geopolitical progress against still-elevated energy risks. A three-week extension to the Israel-Lebanon ceasefire is offering some support to sentiment, but optimism remains cautious amid ongoing naval tensions and an effective blockade of the Strait of Hormuz.

"Oil prices remain firmly elevated, hovering around $100 and above in some cases, as disruption to this key shipping route continues to raise concerns about global supply and inflation. With geopolitical headlines still driving volatility - including President Trump's order for the US Navy to target vessels laying mines in the region - markets look set to stay reactive."

Trump announced on Truth Social that the ceasefire between Lebanon and Israel will be extended by three weeks following talks between the two sides at the White House. The US president said that a meeting between vice president JD Vance, secretary of state Marco Rubio and the ambassadors to Israel and Lebanon had gone "very well".

"The United States is going to work with Lebanon in order to help it protect itself from Hezbollah," he said.

"The Ceasefire between Israel and Lebanon will be extended by THREE WEEKS. I look forward in the near future to hosting the Prime Minister of Israel, Bibi Netanyahu, and the President of Lebanon, Joseph Aoun. It was a Great Honor to be a participant at this very Historic Meeting."

Investors were also mulling a threat by Trump to impose tariffs on the UK if it does not drop its digital services tax on US social media companies. Speaking to reporters at the Oval Office, the US president said: "We've been looking at it and we can meet that very easily by just putting a big tariff on the UK, so they better be careful.

"If they don't drop the tax, we'll probably put a big tariff on the UK."

The tax, which was introduced in 2020, imposes a 2% levy on the revenues of a number of US tech companies.

On home shores, figures from the Office for National Statistics showed that retail sales unexpectedly rose in March as consumers rushed to get fuel after the outbreak of war in the Middle East.

Retail sales volumes increased by 0.7% in March following a 0.6% decline in February, and versus analysts' expectations for sales to be flat. Fuel sales shot up 6.1% for the month, the highest level since April 2021.

Excluding automotive fuel, retail sales were up 0.2% on the month. Clothing stores' sales volumes rose, which retailers attributed to the improved weather. Computer and telecoms stores, and non-store retailers, saw an increase in sales volumes as retailers reported new product launches, the ONS said.

For the quarter from January to March, retail sales were up 1.6%.

Hannah Finselbach, senior statistician at the ONS, said: "Retail sales rose in the three months to March, with commercial art galleries doing well earlier in the quarter and sales in beauty products stores rising as retailers reported launching new collections. Online shops also saw strong sales across the period.

"Motor fuel sales were up on the quarter, with retailers commenting that many motorists had been filling up their tanks in March following the start of conflict in the Middle East."

Britzman noted that much of the strength was driven by a sharp rebound in fuel sales, alongside a lift from warmer weather and seasonal spending, but said the underlying picture looks less convincing.

"Consumer confidence has already started to roll over and, with inflation and unemployment expected to rise from here, the risk is that this strength proves short-lived, with growth likely to stall in the coming months," he said.

"That backdrop should keep the Bank of England cautious next week, and we expect rates to remain at 3.75%, but the messaging is likely to stay cautious as policymakers remain wary of lingering inflation pressures and the risk of second-round effects."

In equity markets, paper and packaging firm Mondi slid as it reported a fall in first-quarter underlying earnings as market conditions remained "challenging".

Underlying EBITDA came in at �212m, down from �290m a year earlier. Mondi added that the Iran war had "further increased volatility in an already complex operating environment" leading to increased energy, raw material and logistics costs.

Computacenter rallied after saying full-year results were set to be "comfortably ahead" of market expectations following a strong performance in the first quarter, significantly ahead of the prior year and well above its own expectations.

Sainsbury's was in the black after JPMorgan reiterated its 'overweight' rating on the stock.

In broker note action, British American Tobacco rallied after a double-upgrade to 'overweight' at Morgan Stanley, which said it was its top pick in European tobacco.

Market Movers

FTSE 100 (UKX) 10,418.81 -0.37%

FTSE 250 (MCX) 22,690.30 -0.33%

techMARK (TASX) 5,891.98 -0.04%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 346.40p 1.97%

BP (BP.) 579.10p 1.56%

Metlen Energy & Metals (MTLN) 34.73p 1.25%

British American Tobacco (BATS) 4,275.00p 1.23%

The Sage Group (SGE) 895.20p 0.97%

Shell (SHEL) 3,327.50p 0.91%

Reckitt Benckiser Group (RKT) 4,820.00p 0.88%

Relx plc (REL) 2,690.00p 0.67%

Experian (EXPN) 2,795.50p 0.58%

Centrica (CNA) 208.70p 0.48%

FTSE 100 - Fallers

Mondi (MNDI) 793.40p -5.11%

Antofagasta (ANTO) 3,745.00p -2.45%

Fresnillo (FRES) 3,352.00p -2.34%

AstraZeneca (AZN) 14,178.00p -1.93%

Smurfit Westrock (DI) (SWR) 2,964.00p -1.69%

Berkeley Group Holdings (The) (BKG) 3,306.00p -1.61%

Glencore (GLEN) 556.90p -1.58%

Melrose Industries (MRO) 500.80p -1.53%

Anglo American (AAL) 3,715.00p -1.43%

St James's Place (STJ) 1,273.50p -1.39%

FTSE 250 - Risers

Computacenter (CCC) 3,452.00p 4.73%

Oxford Biomedica (OXB) 658.00p 3.30%

C&C Group (CDI) (CCR) 126.40p 2.93%

Target Healthcare Reit Ltd (THRL) 107.40p 2.48%

RS Group (RS1) 613.00p 2.36%

The Schiehallion Fund Limited NPV (MNTN) 1.94p 2.11%

Mony Group (MONY) 174.00p 1.96%

Vesuvius (VSVS) 448.80p 1.72%

Personal Assets Trust (PNL) 546.00p 1.68%

Harbour Energy (HBR) 293.20p 1.60%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 43.30p -3.08%

Ceres Power Holdings (CWR) 465.40p -3.06%

Sirius Real Estate Ltd. (SRE) 100.00p -2.82%

Shawbrook Group (SHAW) 343.50p -2.56%

WH Smith (SMWH) 560.50p -2.54%

Hochschild Mining (HOC) 636.50p -2.53%

Jupiter Fund Management (JUP) 152.40p -2.18%

Avon Technologies (AVON) 1,680.00p -2.10%

BlackRock World Mining Trust (BRWM) 956.00p -2.05%

Pan African Resources (PAF) 144.72p -2.03%