The FTSE 100 fell on Thursday as oil extended its gains above $100 after Donald Trump said he saw no end to the conflict with Iran until after the mid-term elections in November.
Brent crude was trading at $102 per barrel at the time of writing, raising the odds of interest rate hikes globally, including in the UK.
The FTSE 100 fell as a result and was down 0.4% at 10,622 at the time of writing.
Trump’s latest comments were the last thing equity bulls wanted to hear because he has effectively locked in inflationary pressures through the rest of the year.
“Hopes that there would be some kind of resolution before the US mid-terms, to offer relief at the pumps for voters, have been dashed, with President Trump warning the conflict won’t end before the elections,” said Susannah Streeter, Chief Investment Strategist, Wealth Club.
Most FTSE 100 stocks were trading negatively at the time of writing, which will come as no surprise to traders.
Some interest in financial names such as Hiscox, ICG, Aberdeen and Investec helped provide support for the index. Compass Group was the FTSE 100’s top riser, adding 1.9%.
BP and Shell were higher in line with elevated oil prices.
Computacenter fell again as profit-taking continued – it will still be the FTSE 100’s best performer this year, up 70% year-to-date. HSBC lost 1.5% on news that its CFO would step down after only two years in the job.
AB Foods was the FTSE 100’s top faller, sinking over 10% after revealing its crown jewel, Primark, was still struggling.
“The sharp drop at the open is the market saying Primark’s turnaround is still a story, not a number,” said Mark Crouch, market analyst for etoro.
“Like-for-like sales at Primark, expected down 3% in the fourth quarter after a 2.2% drop in the third, tell investors the recovery they had started to price in is not here yet. Summer price cuts and a sharper UK offer have not turned the existing store base. New shops in the US can still lift the headline. They cannot, on their own, justify the multiple a standalone Primark will need. Europe remains the problem, and that is half the estate.”
The firm’s sugar business is also in a spot of bother due to prices and ‘onerous’ contract provisions, which was the icing on the cake for the bears.