London pre-open: Stocks to slide as Middle East conflict escalates

(Sharecast News) - London stocks were set to slide at the open on Monday as the war in the Middle East escalated after the US and Iran exchanged fresh threats over the weekend.

The FTSE 100 was called to open around 1.2% lower. Brent crude was up 1.1% at $113.38 a barrel and West Texas Intermediate was 2.7% higher at $100.90.

Iran threatened on Sunday to "irreversibly destroy" energy infrastructure across the Middle East after Donald Trump said the US would "obliterate" the country's power plants if it did not reopen the Strait of Hormuz within 48 hours.

In a Truth Social post late on Saturday night, Trump said the US would destroy Iran's "various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!". The US president's threat came just a day after he said he was considering "winding down" the war.

Iran's Revolutionary Guards threatened to completely close the Strait of Hormuz if Trump follows through on his threat.

The Iranian president's speak, Mohammad Bagher Ghalibaf, said on Sunday: "Immediately after power plants and infrastructure in our country are targeted, vital infrastructure as well as energy and oil infrastructure across the entire region will be considered legitimate targets and will be irreversibly destroyed."

The vital Strait of Hormuz, through which around 20% of the world's oil supply is normally transported, is now deemed too difficult to pass, leaving numerous tankers stranded at sea.

Neil Wilson, UK investor strategist at Saxo Markets, said: "Now developments over the weekend mean we are entering a new and very dangerous phase for financial markets."

He also said the odds of a US attack on Kharg Island - Iran's vital oil hub - are "shortening by the hour".

On Friday, Axios reported that the Trump administration is considering plans to occupy or blockade Kharg Island to pressure Iran into reopening the Strait of Hormuz.

"This is an escalatory doom loop - or 'escalation trap' with currently no realistic off-ramp," Wilson said. "Neither side has an incentive to back down as the costs of doing so are increasing day by day. Each side thinks pushing harder will force the other to back down."

He noted that last week's strikes on energy infrastructure - particularly Iran's South Pars gas field and Qatar's Ras Laffan LNG complex - marked a significant gear-change in the conflict and markets responded accordingly.

"Ras Laffan is material to global LNG supply and will reduce capacity for a long period," he said. "Short-term volatility in energy markets from the disruption is now turning into lost capacity, which has longer-term consequences and implications for energy pricing, inflation and growth."

In corporate news, a GSK treatment for small-cell lung cancer has been granted orphan drug designation in Japan, the pharma blue chip announced.

The antibody-drug conjugate risvutatug rezetecan has been approved by Japan's health authorities for the treatment after early clinical data showed a durable response in certain types of the disease.

ODD is granted to treatments designed for rare yet serious disease affecting less than 50,000 patients with a high medial need. SCLC makes up 10% to 15% of lung cancer in Japan, GSK said.

PPHE Hotel Group said it had reached agreement with Israel's Bank Hapoalim on a �136.45m loan to fund the acquisition of the freehold interest in Park Plaza London Waterloo.

The International hospitality real estate developer and owner said the facility has an initial two year term, with the right to extend subject to certain conditions, and a floating interest rate, of which around 90% will be hedged.