London pre-open: Stocks to fall, oil up as Trump threatens Iran's infrastructure again

(Sharecast News) - London stocks were set to fall at the open on Thursday following an uninspiring session on Wall Street, with oil prices up as tensions between the US and Iran continued to escalate.

The FTSE 100 was called to open around 18 points lower. At 0720 BST, Brent crude was up 2.2% at $96.14 a barrel and West Texas Intermediate was 1.5% higher at $88.12 after US president Donald Trump threatened once again to bomb Iranian infrastructure.

In a post on Truth Social on Wednesday, he said: "From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by Missile, Rocket, Drone, or any other device or weapon, the United States will bomb and destroy ONE BRIDGE OR POWER PLANT, including those located next to, or in, the Capital City of Tehran."

Investors will also be mulling earnings from Tesla and Google-owner Alphabet released overnight.

Ipek Ozkardeskaya, senior analyst at Swissquote, said: "I'm not going to beat around the bush. The first earnings from the Big Tech companies came in strong, but spending was even stronger, leaving some investors nervous and others relieved.

"Tesla reported a 23% rise in Q2 revenue compared with the same period last year (when revenue had taken a hit due to the political controversies surrounding Elon Musk, remember). Record vehicle sales brought in the money, but AI spending ate into margins: the operating margin fell from 4.1% to 1.4%. The company reiterated plans to spend around $25-26 billion this year on AI infrastructure, robotaxis, Optimus and custom chips. Investors didn't like what they heard and sent the shares down 4% in after-hours trading.

"Over at Alphabet, the picture was much the same. Google parent Alphabet reported strong numbers: total revenue rose 24% to nearly $120 billion, operating profit climbed 34% to more than $40 billion and - this is the big number - cloud revenue surged 82%, well above the 63% cloud growth reported in Q1. That seems to support the idea that Google is right to invest heavily in AI infrastructure: the business is growing, and it is growing fast.

"Alas, even these results failed to bring investors back on board, as the company raised its full-year AI spending guidance by another $15 billion to $195-205 billion, while its free cash flow turned negative. In other words, the company has burned through its cash, and the additional spending will have to be financed through debt and equity issuance. Unfortunately, rising interest rate expectations make that proposition far less appealing to investors. So despite an 82% increase in cloud revenue - a metric that would have thrilled investors a year ago - Alphabet shares fell 3%."

In UK corporate news, there was a raft of releases for investors to sink their teeth into.

EasyJet reported a drop in third-quarter headline pre-tax profit to �85m from �286m in the same period a year earlier as it was hit by high fuel prices and a reduction in consumer demand following the onset of the conflict in the Middle East.

The results came a day after the shares tanked on a report the European Union is preparing a review of airline ownership rules to prevent foreign investors from gaining effective control of carriers - a move that could threaten US bids for the budget airline.

British Gas owner Centrica posted softer first-half earnings, weighed down by production outages and Spirit Energy disposals.

The blue chip said earnings before interest, tax, depreciation and amortisation fell to �737m in the six months to 30 June, from �900m, while adjusted operating profits slid to �497m from �549m.

Centrica said the year-on-year decline was driven predominantly by lower realised prices in nuclear, outages and the sale of the majority of Spirit Energy's assets. The company also flagged that annual adjusted EBITDA in its retail arm was likely to come in towards the lower end of its guidance range, of between �500m and �800m.

Telecommunications giant BT Group said it had made a "solid" start to the year, posting adjusted revenues of �4.3bn in its first trading quarter, broadly flat yearonyear, and adjusted underlying earnings of �2bn, down 1% year-on-year as lower broadband and voice margins offset strong cost transformation.

The company also reaffirmed its fullyear financial targets, including around �2bn of cash flow.