FTSE 100 and sterling take a hit after Israel strikes Iran
The FTSE 100 and pound tumbled Friday morning after Israel launched a flurry of strikes targeting Iran’s nuclear programme.
The UK’s blue-chip index was down 0.6 per cent during early trading, led by a slump in the airline sector.
BA parent IAG and low-cost airline Easyjet were down nearly four per cent following the crash of an Air India plane yesterday.
Israel’s attack on Tehran early Friday morning rekindled fears of an all-out war in the Middle East.
Of the risers, defence and aerospace firm BAE Systems topped the index at over two per cent as tensions boiled over.
Shares in oil majors also jumped. BP was up over two per cent and Shell 1.5 per cent.
Oil prices spiked following Israel’s attack – marking the highest jump in more than three years. Meanwhile, gold jumped to $3,427, hitting a 1.2 per cent jump during Asian trading hours.
FTSE 100 and pound fall after record sessions
The mid-cap FTSE 250 was down over one per cent led by a six per cent drop from exploration firm Energean, whose central focus is offshore gas production in Israel.
As markets opened, the pound was also down 0.5 per cent against the dollar, trading between $1.35 and $1.36.
This follows a record-setting performance for the FTSE 100, closing at an all time high of 8,884.92. The sterling also rose above $1.36 for the first time since early 2022 on Thursday, peaking at $1.3623 before retreating some gains.
Kathleen Brooks, research director at XTB, said: “The sheer scale of the attack and the potential devastating consequences for the region is likely to support the oil price at elevated levels. Typically, geopolitical risks do not have a long-term impact on the oil price, however, this is a complex and evolving situation.
“Iran supplies the world with 5 per cent of the global oil supply, so there is a risk that oil supply could be disrupted. This is why the oil price has surged, although it has pulled back from the 13 per cent rise overnight. This conflict also has a nuclear element since Iran has the pulled out of nuclear talks with the US that were scheduled for Sunday.”