The FTSE 100 recovered early losses on Friday, trading little changed as traders assessed the latest developments in the Middle East.
We’re in a strange situation where Donald Trump is suggesting the US is nearing a deal with Iran while at the same time restarting military action against them.
The escalation of military action in the Strait of Hormuz caused a wobble in stocks, with the FTSE 100 falling to a low of 10,184 in early trade before rebounding to 10,262 at the time of writing.
“The FTSE 100 started Friday on the back foot as local election results trickled in and tensions simmered in the Middle East,” said AJ Bell investment director Russ Mould.
“While officially the ceasefire between the US and Iran remains in place, an exchange of fire in the Strait of Hormuz has helped to extinguish some of the hope that a deal between the parties might be close.
“For now, the move higher in Brent crude oil prices is relatively modest and still substantially below last week’s highs, suggesting commodity traders still see a chance for de-escalation in the region.”
JD Sports was the top riser again, as investors continued to buy into the sports-fashion brand following a relatively upbeat trading statement yesterday. JD Sports was 4% higher on Friday.
IAG shares were slightly weaker after the company lowered its profit guidance due to higher fuel prices. But the group had a good start to the year, and shares have fallen sharply since the start of March, suggesting much of the bad news around fuel prices is already priced in.
“British Airways owner IAG had a strong first quarter, with operating profits rising sharply thanks to slim revenue growth and very tight cost controls,” explained Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“Given the timing of the Middle East conflict, it’s had very little impact on first-quarter results. Much more important is the outlook for the rest of the year, and so far, IAG is largely on schedule. Yes, full-year profits and free cashflows will be lower than originally expected, and capacity growth this year has been wound back a touch from its original 3% target.”
Intertek was the FTSE 100’s top faller after rebuffing a third 5,800p offer from EQT. EQT has made offers of 5,150p and 5,400p, which were rejected.