The FTSE 100 slipped on Thursday after yesterday’s surging rally faded amid hopes of a lasting ceasefire in the Middle East, and oil stocks dragged on the index.
After such a strong run-up in stocks yesterday, it wasn’t surprising to see the FTSE 100 ease off slightly on Thursday.
Apart from reports of the US attacking an Iranian-flagged ship and Israel striking Beirut, the Middle East diplomatic efforts remained on track, with Trump claiming they were close to a deal.
This was taken as progress towards an eventual reopening of the Strait of Hormuz, and oil prices reacted accordingly, with Brent dropping to $98.97.
“European markets mostly continued yesterday’s strong session, which saw equities rally globally on hopes of a resolution to the Middle East conflict,” said Dan Coatsworth, head of markets at AJ Bell.
“The exception was the FTSE 100 which fell 0.6% as energy stocks weighed on the index amid oil falling back below $100 a barrel.”
There were several high-profile corporate updates that also weighed in on the index on Thursday.
“Shell reported bumper profits, but the market had fully expected that outcome. BAE Systems also pulled back on its trading update as investors were disappointed at the lack of upgrades to its forward guidance,” Russ Mould said.
But beyond the headline stories and the index-level decline, there were reasons for investors to be optimistic.
JD Sports was the FTSE 100’s top riser, jumping 6%, as the market dared to view its full-year results in a positive light.
“JD Sports hasn’t kicked off the year in style, but there were early signs of improving trends in its largest region, North America,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“On the face of it, total sales growth of 11.7% in a tough retail market looks impressive. But stripping out the impact of its Hibbett and Courir acquisitions, organic sales growth came in at a more slender 2.1%. The Middle East conflict hasn’t had a direct impact on JD Sports so far, given its lack of presence in the region, but there’s potential for it to weigh on consumers’ confidence and spending power going forward if energy prices remain elevated.”
JD shares were 6% higher at the time of writing.
Hiscox shares reacted well to the news that insurance contract written premiums increased by 10.2%. Hiscox jumped 5% on the news.
Miners were higher, demonstrating underlying positive sentiment. But this was offset by companies such as RELX and Admiral Trading ex-dividend.