Middle East peace concerns hurt FTSE 100 for third week

FTSE Futures

The FTSE 100 experienced a decline on Friday, prompted by renewed hostilities in the Gulf that heightened concerns regarding the tenuous month-long ceasefire between the U.S. and Iran. Concurrently, investors were processing preliminary local election outcomes, which indicated significant setbacks for Prime Minister Keir Starmer’s Labour Party.

The blue-chip FTSE 100 index fell 0.1% to 10,261.38 points by 0947, indicating a trajectory towards a third consecutive weekly decline. The midcap FTSE 250 rose 0.2%, marking its third consecutive day of gains. Starmer stated he would not step down following preliminary results indicating that the populist Reform UK party, led by Brexit campaigner Nigel Farage, secured over 350 council seats across England.

  • The results underscored the fragmentation of Britain’s traditional two-party system, evolving into a multi-party democracy, marking a significant political transformation, according to analysts.
  • “Risks of a leadership challenge can rise post ​the May local elections, though it is not a given,” strategists at Bank of America said in a ‌note, ⁠adding “if a leadership challenge were to ensue, and a left-leaning Labour leader were to emerge, risks of higher borrowing would increase.”
  • The British pound strengthened, impacting the stock performance of UK multinationals that derive a significant portion of their revenue from international markets.
  • British Airways owner IAG opened a new tab, falling 2.1% after warning that its annual profit would be lower than forecast. The company also indicated that jet fuel costs would be approximately 2 billion euros higher in 2026 than in 2025 due to the ongoing conflict.
  • Intertek opens new tab shed 3% after rejecting a third sweetened 8.93 billion pound takeover proposal from Swedish private equity firm EQT AB opens new tab.
  • Global risk sentiment exhibited fragility following the exchange of fire between the U.S. and Iran in the Middle East, despite U.S. President Donald Trump’s efforts to downplay the hostilities. Oil prices have climbed back above the $100 per barrel mark.
  • Domestic data indicated that British house prices experienced a decline in April for the second consecutive month, as apprehensions regarding the ramifications of the conflict in Iran dampened buyer demand.
  • The attention will turn to the U.S. jobs report later today.