(Sharecast News) - London stocks fell in early trade on Thursday as oil prices shot higher amid worries over a potential escalation in the Middle East conflict.
At 0835 BST, the FTSE 100 was down 0.8% at 10,377.42, while Brent crude was up 3.7% at $103.88 a barrel and West Texas Intermediate was 3.5% higher at $91.33 after Axios reported that the Pentagon instructed US Central Command several days ago to conclude preparations for resuming major combat operations in Iran.
According to Axios, 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.
Patrick Munnelly at Tickmill Group said: "Global equity markets fell on Thursday as surging crude prices and escalating Middle East tensions reignited stagflation concerns, ending a rally that had brought major benchmarks back toward record highs."
Commenting on the jump in crude, Munnelly said risk premia intensified further following Houthi attacks on Saudi airport infrastructure, raising concerns that Middle East disruptions are expanding beyond the Strait of Hormuz to threaten broader Gulf logistical networks.
"Soaring supertanker freight rates continue to compound the effective delivered cost of energy, with prediction markets pricing less than a 50% probability that shipping traffic through Hormuz normalises by mid-2027," he added.
On home shores, the latest residential market survey from the Royal Institution of Chartered Surveyors 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 Aberdeen cut its stake in the company, while WPP and Kingfisher lost ground as they traded without entitlement to the dividend.
On the upside, 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.
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.
Market Movers
FTSE 100 (UKX) 10,377.42 -0.78%
FTSE 250 (MCX) 23,841.04 -0.81%
techMARK (TASX) 6,083.50 -1.20%
FTSE 100 - Risers
Imperial Brands (IMB) 2,578.00p 3.59%
Tesco (TSCO) 490.10p 3.42%
IG Group Holdings (IGG) 966.50p 2.55%
Sainsbury (J) (SBRY) 335.00p 2.32%
Abrdn (ABDN) 237.40p 1.80%
BP (BP.) 569.70p 1.46%
Pearson (PSON) 1,255.50p 1.33%
Shell (SHEL) 3,692.00p 1.32%
London Stock Exchange Group (LSEG) 8,412.00p 1.01%
Games Workshop Group (GAW) 16,520.00p 0.49%
FTSE 100 - Fallers
Standard Life (SDLF) 826.00p -5.45%
Melrose Industries (MRO) 439.80p -2.88%
Rolls-Royce Holdings (RR.) 1,381.60p -2.41%
WPP (WPP) 375.20p -2.16%
Kingfisher (KGF) 322.30p -2.13%
Smiths Group (SMIN) 2,712.00p -2.13%
Antofagasta (ANTO) 3,621.00p -2.09%
HSBC Holdings (HSBA) 1,380.00p -1.99%
Standard Chartered (STAN) 2,112.00p -1.95%
Balfour Beatty (BBY) 858.00p -1.89%
FTSE 250 - Risers
Premier Foods (PFD) 197.80p 4.32%
Pennon Group (PNN) 365.00p 2.99%
Harbour Energy (HBR) 274.60p 2.31%
Man Group (EMG) 333.80p 2.26%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 431.50p 2.24%
Utilico Emerging Markets Ltd (DI) (UEM) 299.00p 2.05%
Bloomsbury Publishing (BMY) 657.00p 1.86%
W.A.G Payment Solutions (EWG) 98.90p 1.23%
Bridgepoint Group (Reg S) (BPT) 368.00p 1.21%
Wetherspoon (J.D.) (JDW) 995.50p 1.07%
FTSE 250 - Fallers
Volution Group (FAN) 622.00p -5.80%
Foresight Group Holdings Limited NPV (FSG) 431.00p -4.35%
NCC Group (NCC) 143.00p -4.16%
Unite Group (UTG) 429.40p -3.72%
Oxford Nanopore Technologies (ONT) 212.80p -3.45%
XP Power Ltd. (DI) (XPP) 1,938.00p -3.33%
THG (THG) 25.92p -3.28%
Wizz Air Holdings (WIZZ) 999.50p -2.96%
Oxford Instruments (OXIG) 2,958.00p -2.95%
Raspberry PI Holdings (RPI) 644.25p -2.84%
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