The FTSE 100 opened higher, driven by gains in energy and industrial metal mining stocks.
The blue-chip index rose 0.5%, while the more domestically-focused FTSE 250 remained flat.
Oil and gas shares surged 2.9% as oil prices spiked by more than a dollar amid heightened concerns over Iran’s missile strike on Israel.
Industrial metal miners climbed up to 1.7%, supported by higher copper prices following China’s stimulus measures.
JD Sports dropped as much as 6%, landing at the bottom of the FTSE 100, after the sports retailer did not revise its annual profit guidance, despite surpassing expectations for the first half of its financial year. The company cited a £20m foreign exchange headwind in the second half.
Aston Martin fell by as much as 5.1%, dragging it to the bottom of the FTSE 250 and marking its third consecutive day of losses following a profit warning.
Gas prices rise
Gas prices surged as Israel shut down key fields following Iran’s missile strike, sparking concerns over supply disruptions in the Mediterranean.
Dutch front-month futures, Europe’s benchmark for natural gas, briefly spiked to their highest level since mid-August.
Chevron halted operations at its major Tamar and Leviathan gas platforms as a precaution after Iran launched about 200 ballistic missiles at Israel.
Traders worry that Egypt, a major buyer of Israeli gas, may turn to the global market for natural gas, increasing demand.
Trafigura’s chief economist, Saad Rahim, told Bloomberg TV: “No one really knows how far this could spread. If we start seeing LNG shipments from Qatar being disrupted, it could have global consequences.”
Dutch front-month futures rose as much as 3.2% to over €40 per megawatt hour, though they later retreated. The UK equivalent contract increased by as much as 2.2%, nearing £1 per therm.
Oil market remains volatile ahead of potential Israeli retaliation.
Brent crude continues to climb, rising 2% today, surpassing $75 a barrel amid reports that Israel is preparing to strike Iran, possibly targeting oil facilities. This comes after Israeli Prime Minister Benjamin Netanyahu vowed retaliation following Iran’s launch of 180 ballistic missiles.
Callum Macpherson, head of commodities at Investec, commented:
“Oil markets rallied after Iran’s attack on Israel, and there are now concerns about how Israel might respond and how Iran could retaliate in turn. For oil markets, the key question is whether this escalation could disrupt oil supply.”
He added that the market is likely to remain tense, with uncertainty about Israel’s next move causing traders with short positions to buy on any dips to avoid being caught in a further price spike.
However, Macpherson noted that while the market is jittery, there may not ultimately be any disruption to supply, meaning the broader outlook for oil could remain unchanged despite current events.
