The FTSE 100 traded lower on Thursday as investors reacted to renewed military action between the United States and Iran while awaiting the European Central Bank’s latest interest rate decision. Escalating geopolitical tensions pushed oil prices sharply higher and prompted a cautious tone across European equity markets.
As of 03:38 ET (07:38 GMT), the FTSE 100 was down 0.17%, while Germany’s DAX declined 0.82% and France’s CAC 40 fell 0.92%. Sterling edged 0.03% lower against the U.S. dollar to 1.3377.
U.S.-Iran conflict fuels market uncertainty
The latest bout of market volatility followed fresh U.S. military strikes against Iranian targets.
U.S. Central Command said on social media platform X that American forces “began launching more strikes against Iranian military targets” on Wednesday “at the Commander in Chief’s direction,” with the objective of further reducing Tehran’s ability to “threaten civilian mariners and commercial vessels.”
CENTCOM also rejected Iranian claims that its Revolutionary Guard navy controls the Strait of Hormuz, describing those assertions as “FALSE” and stating that U.S. forces have escorted more than 900 vessels through the strategic waterway since early May.
Speaking in Marietta, Georgia, U.S. President Donald Trump described the conflict as a “skirmish,” adding that Iran is “getting hit so hard” and “they want to make a deal,” although he said Tehran was “not ready” because “every time they make a deal they want to change it.”
Trump also warned on Truth Social that the United States would “bomb and destroy ONE BRIDGE OR POWER PLANT” for every Iranian attack on shipping in the Strait of Hormuz, “including those located next to, or in, the Capital City of Tehran.”
Iran rejected the U.S. accusations. Foreign Ministry spokesman Esmail Baghaei described allegations concerning a site known as “Kolang Kouh” as “a fabricated pretext for aggression,” while colleague Esmaeil Baqaei separately accused Washington of committing war crimes in “Minab and Lamard.”
Iranian news agency Tasnim also reported that Larak Island near the Strait of Hormuz had been targeted in a U.S. missile strike, with assessments of the damage still underway.
Separately, the United States and Saudi Arabia signed a “123” civil nuclear cooperation agreement aimed at expanding strategic and commercial cooperation. The agreement will now be submitted to the U.S. Congress for review.
Rising geopolitical tensions lifted energy markets, with Brent crude climbing 3.94% to $97.77 per barrel and WTI crude rising 3.1% to $89.52. Gold futures fell 1.1% to $4,106.95 an ounce, while spot gold eased 0.62% to $4,103.10.
UK stocks in focus
EasyJet (LSE:EZJ) reported a sharp fall in third-quarter profit as higher fuel prices and weaker travel demand linked to the conflict in the Middle East weighed on earnings. However, the airline said bookings continue to improve ahead of the peak summer travel season.
Heathrow Airport posted lower first-half core profit as higher tax-related costs and uncertainty surrounding travel demand offset resilient passenger traffic.
Anglo American (LSE:AAL) reaffirmed its full-year copper production guidance and lowered its 2026 copper cost forecast, although it warned that its diamond and steelmaking coal businesses are expected to report first-half underlying losses. The miner also said its proposed merger with Teck Resources remains on schedule.
Centrica (LSE:CAN) announced plans to reduce its workforce by around 1,300 positions as part of its restructuring programme while continuing to invest in nuclear energy. The British Gas owner also reported an 18% decline in adjusted first-half core profit following asset disposals, production outages and weaker market conditions.
Mitchells & Butlers (LSE:MAB) said unusually hot weather weighed on sales at its food-led pubs during the third quarter, although like-for-like sales for the financial year to date remained 2.2% higher.
3i Group (LSE:III) reported continued growth at discount retailer Action, with like-for-like sales increasing 3.6% during the second quarter, while net asset value per share rose despite foreign exchange headwinds.
AJ Bell (LSE:AJB) announced that assets under administration reached a record £121.5 billion, supported by strong customer growth and net inflows. The investment platform also confirmed it will reduce charges on its managed portfolio service from October.
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