- FTSE 100 opens down
- BP offloads Gelsenkirchen refinery
- Oil and Gas prices spike again after attacks in Qatar and Iran
- US futures weak after Fed holds rates and raises inflation forecast
- Micron shares fall despite stellar Q2 numbers
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100 has opened down after overnight strikes on the world’s largest LNG facility in Qatar, and Iran’s South Pars gas field. In contrast to previous Middle East conflicts, the US is not drawing broad support from other Western nations, and calls by Oman’s foreign minister for Washington’s allies to help de-escalate the situation are well-founded. For now, the path back to the negotiating table looks far from clear, but as economic reality sets in, things could change. Any steps in this direction could provide welcome relief for stock markets.
BP’s decision to offload the Gelsenkirchen refinery in Germany is another positive step toward streamlining the business and reducing debt. The immediate impact on the debt pile hasn’t been revealed, but plans to reduce capacity at this outdated facility have been touted previously, and margin improvement has been hard to come by. The disposal removes a further $1bn of operating costs, while elevated commodity prices may have helped BP gain a better price.
The most recent hostilities have sent Brent Crude prices up to around $114 per barrel, with European natural gas futures up around 25% to €68 per megawatt-hour. Donald Trump’s moves to reduce energy freight costs by temporarily lifting the Jones Act may take a little edge off these latest price increases, but it’s not a long-term fix.
These latest energy price increases will compound inflationary concerns after the Federal Reserve held rates steady yesterday at 3.5%-3.75%. Beyond the impact of tariffs and the energy shock, Chair Jerome Powell also noted stubborn services inflation. The bank’s year-end core PCE inflation forecast was raised from 2.4% to 2.7%. Rate cuts are still being considered for later in the year, but markets are no longer pricing in a further cut in US headline rates this year.H
US markets closed down yesterday evening and are now near six-month lows, with futures pointing to a weak open later today. Year to date, the tech-led NASDAQ has underperformed the wider index.
Matt Britzman, senior equity analyst, Hargreaves Lansdown
Micron showed there’s still no let‑up in the pace of AI infrastructure build‑out, with results and guidance comfortably ahead of consensus in what was effectively a blowout set of numbers. However, after rallying more than 10% in the run-up to results, investor expectations had already risen, leaving the roughly 4% after-hours decline looking more like profit-taking than genuine disappointment.”
