The FTSE 100 slipped in risk-off trade on Thursday as investors reacted to the news that the US was considering launching an attack against Iran.
It would mark a significant escalation in the Middle East conflict and threatens to stoke inflationary pressures for major economies that are already seeing signs of economic slowdown.
London’s leading index was 0.3% weaker at the time of writing.
“Markets are back under pressure as US officials continue to weigh the possibility of direct involvement in the escalating Iran-Israel conflict,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“Any move in that direction would likely rattle investor confidence further, raising fears of a broader regional escalation and dragging in other major powers like China, where trade talks with the US are already on a knife’s edge. The FTSE 100 has mirrored the global risk-off mood, slipping in early trading and giving back yesterday’s modest gains.”
Markets were also digesting the latest instalment from the Federal Reserve and the Bank of England and their decisions to keep rates on hold and wait for further data.
“Central banks are in a ‘wait and see’ mood with regards to interest rates, despite broad concerns about a weaker economic outlook,” explained Russ Mould, investment director at AJ Bell.
Most stocks were down at the time of writing in London as investors trimmed positions amid rising Middle East tensions.
A number of the top fallers, such as Persimmon and United Utilities, were trading lower after losing the rights to their latest dividends.
BP and Shell were again among the gainers as oil prices ticked higher.
Defensive ‘safer’ stocks also gained on the session. Supermarkets Tesco and Sainsbury’s rose, while the safety of Vodafone’s reliable cash flows caught the attention of investors, with shares adding 1%.
Whitbread
Whitbread shares fell on Thursday after the hospitality group said its UK Premier Inn chain suffered a 2% drop in accommodation sales in the first quarter. The group’s UK food and beverage sales sank 16%. Germany remained a bright spot, but growth of 16% wasn’t enough to offset weakness in the UK.
“Normally-reliable Whitbread provided an unpleasant surprise for investors with their poorer update this morning,” said Chris Beauchamp, Chief Market Analyst at IG.
“Always a useful bellwether of the UK consumer, Whitbread suggests that the economy is still in a tough patch, though the better Germany performance was at least some comfort for investors. Hopefully the longer-term turnaround will bear fruit in due course; once a star performer, Whitbread’s shares have lost direction over the last decade, although the dividend helps to boost their attractiveness.”