London equities suffered broad losses on Wednesday as renewed conflict in the Middle East unsettled global markets, sending oil prices sharply higher.
The FTSE 100 finished 176.84 points, or 1.7%, lower at 10,489.04, while the FTSE 250 dropped 361.18 points, or 1.5%, after US President Donald Trump declared the ceasefire with Iran was “over” following further fighting triggered by Iranian attacks on shipping in the Strait of Hormuz.
Tehran has insisted it controls the strategic waterway, saying vessels must follow its authorised route while warning that ships which do not comply could be targeted, with recent attacks on commercial vessels prompting extensive US strikes on Iranian positions before Iran retaliated against Gulf countries.
Speaking at a Nato summit in Turkey, Trump dismissed hopes that the truce remained in place, telling reporters, “As far as I’m concerned, it’s over,” before adding, “It’s just a waste of time dealing with them.”
The deterioration in the situation pushed Brent crude to $80.00 a barrel from $73.88 the previous day, strengthening energy stocks even as the wider market weakened.
BP was the strongest performer on the FTSE 100 with a 3.5% gain, while Shell added 2.3% as higher oil prices improved earnings expectations for producers.
Airline shares moved in the opposite direction as investors weighed the prospect of rising fuel bills and further disruption to Middle East air travel, leaving British Airways owner IAG down 4.8% while Wizz Air lost 5.0% on the FTSE 250.
Mining stocks also came under pressure as metal prices weakened, with Antofagasta falling 6.4%, Endeavour Mining losing 7.1%, Anglo American declining 6.3% and Rio Tinto ending 4.9% lower.
Across Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt both closed 2.2% lower, while losses extended to Wall Street where the Dow Jones Industrial Average was down 1.6% and both the S&P 500 and Nasdaq Composite traded 1.1% lower.
Warehouse developer Segro slipped 1.8% despite outlining long-term financial targets and highlighting what it described as significant growth opportunities as it seeks to resist interest from Prologis.
Ahead of an investor presentation, the company said its industrial and logistics development pipeline could generate an additional £429 million in future headline rent, while opportunities linked to Europe’s expanding data centre sector could provide a further £460 million of potential income.
Among mid-cap shares, Vistry fell 7.1% after announcing Chief Financial Officer Tim Lawlor would step down and warning it expects a first-half pre-tax loss of about £30 million before any further impact from an operational review being led by Chief Executive Adam Daniels.
Daniels, who took over as chief executive in April, is expected to present the findings of the review alongside the company’s interim results in September.