Monday Morning Markets: FTSE 100 Slides as Middle East Strikes Send Oil Jumping

Weekend missile exchanges between Iran and Israel have impacted global market sentiment on Monday, pushing the FTSE 100 down 0.3% and sending oil prices sharply higher. 

Here’s what you need to know.

The Big Picture

The escalation between Iran and Israel has dominated weekend headlines, with missile strikes reported on both sides.

The fallout has been swift, with both Brent and WTI jumping over 4% a barrel and risk appetite taking an immediate hit. 

London joins Frankfurt and Paris in trading lower this morning, with other European markets also in the red. 

There is also somewhat of a hangover from Wall Street’s plunge on Friday, when the Nasdaq suffered its biggest point drop on record, falling 4.2%, as a blockbuster non-farm payrolls print (172,000 vs 85,000 expected) reignited rate-cut doubt alongside the geopolitical shock.

FTSE 100 Movers

Of course, energy names are beneficiaries of the rise in oil prices, with Shell (+0.8%) and BP (+1.1%), with the crude bump feeding directly into upstream earnings expectations. 

The biggest FTSE 100 riser so far today is British American Tobacco, up around 1.7%.

IAG (British Airways’ parent) is under pressure (-2%) as higher jet fuel costs threaten to squeeze airline margins just as the summer travel season approaches. 

Housebuilders and rate-sensitive growth stocks are softer, dragged by the U.S. jobs data reinforcing a higher-for-longer interest rate backdrop.

The biggest faller so far is surprisingly Melrose Industries (-3%), followed by Barratt Redrow (-2.6%) and Scottish Mortgage Investment Trust (-2.4%).

The Week Ahead

• Monday: Apple WWDC kicks off and runs through June 12.
• Wednesday: US inflation data will be released, a pivotal read for Fed rate expectations after Friday’s NFP surprise. WH Smith will provide a trading update.
• Thursday: The ECB will announce its rate decision.  Wizz Air and Halma are also expected to provide updates to the market.
• Throughout the week: SpaceX IPO preparations continue to dominate City conversation