London stocks are set to open higher on Thursday despite renewed military escalation in the Middle East, as investors also assess the latest Federal Reserve meeting minutes.
Futures indicate the FTSE 100 will open around 50 points higher, or 0.5%, at 10,539.04. The index of London large-caps closed 1.7% lower at 10,489.04 on Wednesday.
UK politics also remains in focus after Al Carns ruled himself out of the Labour leadership race, clearing the way for Andy Burnham to become the party’s next leader and potentially the next prime minister.
Nominations for the leadership contest open on Thursday, although Carns was considered the last viable challenger weighing whether to secure the required backing of 81 MPs.
In the absence of another candidate, former Greater Manchester mayor Burnham is expected to be formally declared Labour leader at a special conference on 17 July, with his appointment as prime minister expected on 20 July.
Meanwhile, tensions in the Middle East intensified after the US launched fresh strikes on Iran following President Donald Trump’s warning that Washington would respond forcefully to Iranian attacks on commercial vessels in the Strait of Hormuz.
US Central Command said the strikes were intended to degrade Iran’s ability to threaten freedom of navigation through the strategically important waterway.
Iran’s Mehr news agency reported explosions in the port cities of Bandar Abbas, Konarak and Chabahar.
Trump had earlier declared that the ceasefire with Iran was over, prompting Pakistan, Qatar and the United Nations to call for de-escalation. He also warned that US bombing could intensify if Tehran continued attacking vessels in the Strait of Hormuz.
Iranian negotiator Mohammad Bagher Ghalibaf said the strait would reopen only under “Iranian arrangements” and warned that further US strikes would provoke retaliation.
Iran’s Revolutionary Guards said they had retaliated by targeting US military bases in Bahrain and Kuwait with missiles and drones, while warning that attacks could spread to other American bases in the region if US strikes continued.
Brent crude was trading at USD78.36 a barrel early Thursday, down from USD80.00 late Wednesday.
Sterling strengthened against the dollar to USD1.3406 from USD1.3358 at the London equities close on Wednesday. Against the euro, the pound was little changed at EUR1.1721.
The euro traded at USD1.1432, up from USD1.1398 late Wednesday, while the dollar weakened against the yen to JPY162.36 from JPY162.68.
On Wall Street, markets ended mixed on Wednesday. The Dow Jones Industrial Average fell 1.1%, the S&P 500 declined 0.3%, while the Nasdaq Composite gained 0.2%.
In Asia on Thursday, Japan’s Nikkei 225 rose 1.3%, while the Shanghai Composite was little changed. Hong Kong’s Hang Seng fell 1.0%, and Australia’s S&P/ASX 200 declined 0.4%.
Gold was quoted at USD4,075.60 an ounce early Thursday, up from USD4,022.15 on Wednesday.
Back in the UK, house prices remained under pressure in June, although the latest survey from the Royal Institution of Chartered Surveyors pointed to tentative signs of stabilisation.
The net balance for house prices improved to minus 33% in June from a revised minus 34% in May. Economists had expected a reading of minus 30%.
On Thursday’s corporate calendar, Brooks Macdonald and Hostelworld are due to issue trading updates, while Severn Trent is scheduled to report first-quarter results.
