- FTSE down as geopolitics overshadows positive earnings news.
- Losses extended after the UK flash PMI release.
- Brent crude above $103 per barrel as Iran tightens grip on key waterway.
- US stock futures dip – initial jobless claims numbers later today.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100 opened down around 50 points this morning as the diplomatic impasse in the Middle East overshadows resilient earnings news. Sainsbury’s is one of the biggest fallers of the day, as a cautious outlook took the shine off a full-year earnings beat. Meanwhile, Relx and the London Stock Exchange Group, whose shares have recently rebounded strongly from the sell-off amid AI disruption fears, both came out with strong trading updates.
The S&P Flash UK PMI for April showed an upturn in both services activity, which reached a two-month high of 52.0, and manufacturing, which was the strongest print in 47 months at 53.6. But there’s a major caveat. Much of this increased momentum comes from a dash to lock in purchases, on fears of price rises and supply chain disruption from the war. An underlying decline in business confidence and a weak outlook for the labour market tallies with our view that Bank of England lending rates are likely to hold steady until firm progress towards the end of the Iran war is made. The FTSE 100 is down circa 50 points further following the release.
Brent Crude has risen every day this week and now sits at over $103 per barrel. Shipping in the Gulf remains severely disrupted, with the US intercepting at least three Iranian tankers and Iran restricting nearly all international traffic through the Strait of Hormuz. Washington warned that it could take up to six months to clear the waterway of mines.
US Stock futures are also down today, with shares likely to give back some of this week’s gains when the opening bell rings. Weekly initial jobless claims numbers are out later today. So far through the conflict, the American labour market has proved resilient, which has contributed to rate-cut expectations moving out to at least the end of the year. Consensus forecasts are for a small rise in claimants from last week’s 207k to 212k, which is still well below the long-term average.”
