(Sharecast News) - London stocks fell in early trade on Friday, with oil prices back above $100 a barrel after the US and Iran opened fire in the vital Strait of Hormuz, and as investors eyed the latest US non-farm payrolls report.
At 0830 BST, the FTSE 100 was down 0.7% at 10,207.53, while Brent crude was 0.6% higher at $100.61 a barrel.
Despite the strikes - which each side claimed had been initiated by the other - US president Donald Trump insisted the ceasefire was ongoing and that talks with Iran were going very well.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: "Further exchanges of fire in the Strait of Hormuz overnight have sent Brent Crude oil prices up around 1$ to $101 per barrel, with Tehran seemingly in no hurry to make a deal with President Trump.
"In time, bypasses such as the Israeli Land Bridge and Sharjah-Fujairah Energy Corridor could reduce reliance on this critical energy chokepoint, but none of these are going to be a quick or full fix."
Looking ahead to the rest of the day, the non-farm payrolls report, unemployment rate and average earnings for April will be released at 1330 BST. Consensus expectations are for a 62,000 increase in non-farm payrolls and for the unemployment rate to remain steady at 4.3%.
"With ADP private payrolls coming in better than expected, the numbers could come in a little stronger," said Nathan. "That's a pretty resilient outcome given the geopolitical backdrop. So far, AI is not proving to be the end of the jobs market as we know it, with skilled labour in particularly high demand. With inflationary concerns running high, a strong print could move expectations for rate cuts further out yet."
On home shores, results of the local elections were rolling in, with major losses for Labour and gains for Reform.
Nathan said "it's not looking good for Labour, and the potential for a leadership change is undermining confidence in the UK's fiscal health".
"While political winds can change on a sixpence, the gilt yield is a decent proxy for risk-free returns, a key technical driver of share prices which, all other things being equal (they rarely are!), should move in the opposite direction of yields.
"If government borrowing costs rise further, expect more pressure on the London markets."
Elsewhere, data from Halifax showed that house prices ticked lower in April as geopolitical uncertainty weighed on consumer sentiment.
House prices edged down 0.1% last month, adding to March's 0.5% decline. The average property price now stands at 299,313. Annual growth slowed to 0.4% from 0.8% in March.
Amanda Bryden, head of mortgages at Halifax, said: "After a strong start to the year, recent global developments have added a greater degree of uncertainty to the outlook. In particular, higher energy prices have fed into inflation expectations, prompting markets to reassess the path for interest rates - a shift that has already pushed up borrowing costs for many buyers.
"This understandably leads to more caution among some households, with the cost-of-living once again front of mind and extra thought being given to planned property moves."
In equity markets, Intertek tumbled as it rejected Swedish private equity firm EQT's sweetened offer of 58 a share, saying it "significantly undervalues" the company and its future prospects, and that there was major execution risk given its conditional nature.
IAG slid as it warned that annual profits would be lower than expected at the start of the year due to rising fuel costs as a result of the Middle East conflict.
The profit warning came as the BA and Iberia owner hailed a "strong" first quarter, with operating profit up 77.3% to 351m and revenue 1.9% higher at 7.2bn amid continued solid demand for its network and brands.
Telecommunications provider Airtel Africa lost ground despite in line full-year numbers, while property portal Rightmove fell as it backed full-year guidance and said the property market and partner and consumer engagement remain resilient despite the uncertain macroeconomic backdrop.
Workspace was hit by a downgrade to 'underweight' from 'overweight' at Barclays.
Market Movers
FTSE 100 (UKX) 10,207.53 -0.68%
FTSE 250 (MCX) 22,733.37 -0.65%
techMARK (TASX) 5,893.45 -0.30%
FTSE 100 - Risers
BT Group (BT.A) 224.80p 1.38%
Antofagasta (ANTO) 3,933.00p 1.35%
JD Sports Fashion (JD.) 73.52p 0.71%
Games Workshop Group (GAW) 19,760.00p 0.66%
Lion Finance Group (BGEO) 11,610.00p 0.52%
Imperial Brands (IMB) 2,756.00p 0.35%
Rio Tinto (RIO) 7,697.00p 0.34%
BP (BP.) 536.60p 0.30%
Relx plc (REL) 2,461.00p 0.12%
DCC (CDI) (DCC) 5,730.00p 0.09%
FTSE 100 - Fallers
Intertek Group (ITRK) 4,821.00p -5.03%
International Consolidated Airlines Group SA (CDI) (IAG) 380.80p -4.11%
Melrose Industries (MRO) 507.60p -1.70%
St James's Place (STJ) 1,189.00p -1.65%
Entain (ENT) 530.40p -1.59%
London Stock Exchange Group (LSEG) 9,060.00p -1.57%
Rolls-Royce Holdings (RR.) 1,238.80p -1.54%
Flutter Entertainment (DI) (FLTR) 7,426.00p -1.53%
BAE Systems (BA.) 1,955.00p -1.50%
HSBC Holdings (HSBA) 1,302.20p -1.44%
FTSE 250 - Risers
Ithaca Energy (ITH) 262.10p 2.02%
NCC Group (NCC) 139.40p 1.60%
Bytes Technology Group (BYIT) 317.60p 1.34%
Johnson Service Group (JSG) 138.00p 0.91%
Computacenter (CCC) 3,914.00p 0.82%
Capital Gearing Trust (CGT) 5,110.00p 0.79%
Man Group (EMG) 264.20p 0.76%
Patria Private Equity Trust (PPET) 610.00p 0.66%
North Atlantic Smaller Companies Inv Trust (NAS) 367.00p 0.55%
Diversified Energy Company (DI) (DEC) 1,140.00p 0.53%
FTSE 250 - Fallers
Schroder Asian Total Return Investment Company (ATR) 639.00p -4.91%
Rank Group (RNK) 94.70p -3.66%
Workspace Group (WKP) 339.80p -2.97%
HGCapital Trust (HGT) 360.00p -2.83%
Dr. Martens (DOCS) 62.90p -2.78%
RTW Biotech Opportunities Ltd (RTW) 2.12p -2.75%
AO World (AO.) 85.80p -2.50%
Ceres Power Holdings (CWR) 725.50p -2.47%
Aston Martin Lagonda Global Holdings (AML) 45.06p -2.43%
Ashoka India Equity Investment Trust (AIE) 236.00p -2.28%
54.34 (0.53%)
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