London stocks remained under pressure on Thursday as continued US-Iran attacks on shipping disrupted oil flows through the Strait of Hormuz, keeping Brent crude above $100 a barrel and adding to concerns over inflation and interest rates.
The FTSE 100 closed down 61.14 points, or 0.6%, at 10,608.92. The FTSE 250 fell 222.72 points, or 0.9%, to 23,885.94, while the AIM All-Share dropped 8.30 points, or 1.0%, to 787.95.
Energy markets remained firmly in focus after Iran claimed responsibility for targeting two US vessels and eight oil tankers in the Persian Gulf on Wednesday, in retaliation for US attacks on five Iranian tankers the previous day.
Bloomberg News, citing a senior Iranian official, reported that Tehran was prepared to intensify the conflict should US attacks continue. Despite oil markets remaining relatively resilient, disruption around the Strait of Hormuz has increased the risk of an extended period of elevated oil and gas prices.
Interest rates were also firmly in focus after the European Central Bank raised rates by 25 basis points, matching market expectations. The ECB also increased its baseline inflation forecasts for 2027 and 2028, warning that price growth is likely to remain above its 2% target for an extended period.
In corporate news, Associated British Foods plunged 7.97%, making it the worst performer in the FTSE 100 after reporting weaker-than-expected sales at Primark.
Primark like-for-like sales declined 3%, compared with market expectations for a fall of around 2.2%.
The retailer blamed hot weather for delaying autumn and winter purchases in the UK, alongside continued weakness across Continental Europe and the US.
Despite the disappointing Primark performance, AB Foods continues to expect full-year operating profit to be in line with previous guidance, while adjusted earnings per share are expected to come in ahead of previous expectations.
Intermediate Capital Group slipped 0.52% despite Deutsche Bank Research reiterating its Buy recommendation and £28 price target.
ICG announced the final close of its flagship Europe IX fund at its €12 billion hard cap, with investor demand exceeding the amount available.
The fund is around 50% larger than its predecessor, with ICG describing it as the largest structured capital fund ever raised.
For London markets, however, geopolitical developments remained the dominant influence. With Brent holding above $100, shipping disruption continuing around the Strait of Hormuz and the ECB raising rates, investors remain focused on the risk that the latest energy shock could prolong inflation and force central banks to maintain tighter monetary policy.
