UK equities extended their recent decline on Friday, while the pound slipped below $1.33, as escalating Middle East tensions kept oil prices above $100 per barrel. Investor sentiment was further dampened by weaker-than-expected UK economic data showing the economy failed to grow in January.
By 08:54 GMT, the blue-chip FTSE 100 index had fallen 0.7%. Sterling also weakened, with GBP/USD down 0.6% to 1.3265. European markets were similarly under pressure, with Germany’s DAX declining 0.7% and France’s CAC 40 losing 0.9%.
Iran latest update
Iran’s Supreme Leader Mojtaba Khamenei said Friday that the Strait of Hormuz will remain closed, with Iran effectively blocking maritime traffic to use the blockade as leverage against Western nations.
Separately, the United States moved to ease sanctions on Russian oil in an attempt to reduce upward pressure on global energy prices.
UK round up
New economic data showed the UK economy failed to expand in January, missing expectations and raising fresh concerns about the country’s resilience ahead of rising energy costs linked to the Middle East conflict.
The Office for National Statistics said gross domestic product was unchanged month-on-month at 0.0% in January, below economists’ forecasts for a 0.2% increase. The figures were released Friday before oil prices surged further amid the regional tensions.
UK government bond prices declined, pushing yields higher. The 10-year gilt yield climbed to 4.817%, its highest level since September. Yields on five-year and 10-year gilts increased by roughly three to four basis points shortly after trading began.
Housebuilder Berkeley Group Holdings (LSE:BKG) reiterated its annual profit guidance but cautioned that geopolitical uncertainty and macroeconomic pressures are weighing on housing demand. The company said it still expects pre-tax profit of about £450 million for the current financial year and a similar level for fiscal 2027, while targeting a net cash position of around £300 million by year-end.
Shares in radiator manufacturer Stelrad Group (LSE:SRAD) declined after the company reported annual revenue of £279.6 million, down 3.8% from the previous year amid ongoing economic uncertainty across its key markets in the UK, Ireland and Europe. “Market demand remains subdued and we expect this to continue for at least first half of 2026,” Stelrad said.
Property investor CLS Holdings (LSE:CLI) also fell, becoming the largest decliner on the FTSE small-caps index. The company said economic conditions across Europe remain challenging and noted that it is too early to gauge the potential short- or long-term effects of the Middle East conflict on the region’s economies and property markets. CLS reported that its 2025 net rental income dropped around 11% to £101.3 million.
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