London stocks are expected to open lower on Thursday as investors digest another escalation in hostilities between the United States and Iran, while attention also turns to the European Central Bank’s latest interest rate decision.
Futures indicate the FTSE 100 will open around 28 points lower after the index gained 0.3% on Wednesday to close at 10,254.81.
Market sentiment weakened overnight after fresh military exchanges between Washington and Tehran further undermined hopes of a negotiated settlement to the three-month conflict. The US launched additional strikes against Iranian targets, prompting retaliatory attacks on American facilities in the region.
Iranian authorities also claimed the Strait of Hormuz had been closed to shipping, although US Central Command disputed those reports, stating commercial vessels continue to transit the strategic waterway.
Oil prices moved higher as traders assessed the growing geopolitical risks. Brent crude rose to US$93.40 a barrel, reflecting concerns that any disruption to shipping through the Strait of Hormuz could impact global energy supplies.
The escalation weighed heavily on Wall Street, where investors adopted a risk-off approach. The Dow Jones Industrial Average fell 1.9%, the S&P 500 declined 1.6% and the Nasdaq Composite dropped 2.0%.
Asian markets were also weaker, with losses across Hong Kong and mainland China, while Japan’s Nikkei traded marginally lower.
Investors will now focus on the European Central Bank’s policy announcement later today. Markets will be watching closely for guidance on future interest rate moves and the ECB’s assessment of inflation risks, particularly given the potential impact of higher energy prices resulting from Middle East tensions.
In corporate news, Oracle impressed investors after reporting stronger-than-expected fourth-quarter results and announcing plans to raise US$40 billion through a combination of debt and equity financing to support future growth.
Back in London, investors will be monitoring full-year results from Halma and Wizz Air, while economic data releases include US producer price inflation, weekly jobless claims and the ECB’s interest rate decision.
With geopolitical uncertainty rising and central bank policy remaining in focus, markets are likely to remain volatile as investors balance inflation concerns against slowing economic growth expectations.
