UK equities moved sharply lower on Wednesday after U.S. President Donald Trump declared the ceasefire with Iran “over,” escalating geopolitical tensions and triggering a broad sell-off across European markets while sending oil prices sharply higher.
The FTSE 100 fell 1.61% by 09:14 GMT, with Germany’s DAX down 2.54% and France’s CAC 40 losing 2.23%. Sterling also reversed earlier gains to trade 0.22% lower against the U.S. dollar at $1.3324.
Middle East Tensions Intensify
Speaking on the sidelines of the NATO summit in Ankara, Turkey, Trump described Iran’s leadership as “sick” and said dealing with the country was “a waste of time,” following overnight U.S. strikes on more than 80 Iranian targets.
Regional tensions escalated further as Bahrain activated missile warning sirens for a third time on Wednesday after Iran and Kuwait exchanged fire. Iran’s Revolutionary Guard said it had targeted U.S. military facilities in both countries, claiming Washington had violated a ceasefire agreement, while Kuwait’s military said its air defence systems were “confronting hostile missile and drone attacks.”
Iranian state media also reported explosions in the port city of Bushehr, home to the country’s only civilian nuclear power plant, although no casualties were reported.
The latest developments followed accusations that Iran was responsible for attacks on three commercial vessels transiting the Strait of Hormuz.
“U.S. Central Command forces have begun launching a series of powerful strikes against Iran to impose heavy costs,” CENTCOM said.
The United States also revoked a sanctions waiver that had allowed Iran to export oil, prompting Iran’s foreign ministry to describe the move as a “clear violation” of last month’s memorandum.
Parliament Speaker Mohammad Bagher Qalibaf said, “The era of bullying and extortion is over. It leads nowhere. We don’t fold.”
Oil Extends Rally While Gold Retreats
Oil prices surged as investors priced in increased supply risks. Brent crude climbed 6.27% to $78.78 a barrel, while West Texas Intermediate rose 6.42% to $74.99.
ING analysts noted that the front end of the Brent futures curve had returned to backwardation, while American Petroleum Institute data showed U.S. crude inventories declined by 400,000 barrels last week, alongside larger-than-expected draws in gasoline and distillate stocks.
Additional pressure on energy markets came from increased Ukrainian drone attacks on Russian refineries, tightening diesel supplies and lifting the ICE gasoil crack spread above $50 a barrel. European natural gas prices also strengthened, with TTF futures rising more than 4% to above €48/MWh as storage levels remained below seasonal averages.
Gold prices moved lower as rising oil prices and shifting market sentiment dominated trading. Gold futures fell 2.27% to $4,063.70 an ounce, while spot gold declined 1.26% to $4,054.66.
ING analysts noted that China’s central bank extended its gold-buying programme for a 20th consecutive month in June, providing longer-term support even as short-term price movements continue to reflect expectations for U.S. Federal Reserve policy ahead of this week’s FOMC minutes.
UK Corporate Highlights
Unite Group (LSE:UTG) said reservations for the 2026/27 academic year had reached 86% of available beds, supported by strong direct-let demand, while maintaining its full-year earnings guidance.
Jet2 (LSE:JET2) reported that summer passenger bookings were 7.1% higher than a year earlier, with improving booking trends supported by easing geopolitical tensions.
IG Group (LSE:IGG) announced plans to establish a Jersey-based holding company as part of a broader strategic review designed to enhance shareholder value.
Ofcom fined Virgin Media £28 million after finding the company repeatedly made it difficult for customers to cancel contracts between 2022 and 2024.
Severn Trent Water (LSE:SVT) was found by Ofwat to have breached wastewater obligations, although the regulator opted not to impose a financial penalty after considering the company’s remedial actions.
Vistry (LSE:VTY) said it expects to report a first-half pre-tax loss of around £30 million and confirmed that Chief Financial Officer Tim Lawlor will step down.
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