The FTSE 100 fell 1.05% at the open on Tuesday, as escalating tensions in the Middle East weighed on investor sentiment.
At 07:10 GMT, sterling was broadly unchanged against the dollar at 1.3539, while European markets showed mixed performance. Germany’s DAX edged up 0.05%, and France’s CAC 40 gained 0.13%.
Oil Prices Surge Amid Escalating Conflict
Brent crude climbed sharply, reaching $114.44 on Monday before easing to around $113 in early Tuesday trading. The move reflects heightened fears of a broader conflict following renewed instability around the Strait of Hormuz.
Tensions escalated after missile and drone strikes targeted the UAE, with Abu Dhabi reporting it intercepted 15 missiles and four drones. A fire was later reported at an oil facility in Fujairah port. Iran denied involvement, attributing the incident to U.S. actions, while the UAE condemned the attack and signalled it could respond.
Naval Activity Intensifies in Strait of Hormuz
The situation at sea also deteriorated, with U.S. naval forces escorting vessels through the Strait of Hormuz under reported attack conditions. Helicopters and additional military assets were deployed as part of a broader effort to secure commercial shipping routes.
U.S. President Donald Trump indicated a firm stance, highlighting the availability of military resources and suggesting further escalation if necessary. He also called on South Korea to support the mission after an attack on a Seoul-operated cargo vessel near the UAE coast.
Iranian officials issued strong warnings, with parliamentary leadership suggesting a shift in the strategic balance around the strait, while the country’s foreign minister emphasised that the crisis ultimately requires a political resolution.
UK Market Round-Up
Vodafone Group Plc (LSE:VOD) agreed to acquire CK Hutchison’s 49% stake in its VodafoneThree joint venture for £4.3 billion, taking full control of the UK’s largest mobile operator, serving more than 28 million customers.
HSBC Holdings plc (LSE:HSBA) reported first-quarter pre-tax profit of $9.4 billion, slightly below expectations after a $400 million hit linked to a UK fraud case pushed expected credit losses up to $1.3 billion.
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