The FTSE 100 fell on Wednesday as the number of violations of the current ceasefire in the Middle East increased overnight, raising doubts about when the Strait of Hormuz will reopen.
The US struck Iranian sites overnight, and Iran responded by attacking Kuwait and Bahrain – despite the US President saying talks are continuing.
Investors will be growing tired of the lack of progress in peace talks, but frustrations are not yet evident in UK equity markets, which are bouncing around in a range.
Since the end of March, London’s FTSE 100 has traded sideways between 10,200 and 10,600, with the range tightening in recent weeks as the inflation outlook grows ever more precarious.
But investors are still showing signs of optimism, and the latest developments have only sent the FTSE 100 down by 0.2% to 10,343 at the time of writing.
“Markets continue to ebb and flow in step with Middle East developments,” says Russ Mould, investment director at AJ Bell.
“The lack of solid progress with peace talks has resulted in Brent Crude oil moving back up in price, trading 1.8% higher at $97.76 per barrel.
“That’s weighed on European markets, although the FTSE 100 fared relatively better than its peers thanks to a large weighting towards oil and gas stocks. BP and Shell both traded higher as their earnings will benefit from oil’s ascent, while their trading arms should be busy thanks to ongoing volatility in the commodity price.”
BP and Shell both increased by around 1%.
Elsewhere, gainers and losers were split almost 50/50. UK retailers were back among the best performers with JD Sports, Kingfisher, and Sainsbury’s enjoying buying pressure.
Howden Joinery rose 2% after announcing it had acquired DIY Kitchens and, in the process, entered the direct-to-consumer market.
ICG Group was the top FTSE 100 faller, losing 5%.