London stocks are set for a slightly weaker open on Wednesday, as investors assess a fresh escalation in the Middle East and a sharp rise in oil prices following US strikes on Iran.
FTSE 100 futures are pointing around 30 points lower, more than wiping out Tuesday’s 14.11-point gain, when the index closed at 10,665.88.
Oil prices moved higher after US forces launched strikes on Iran following attacks on commercial vessels in the Strait of Hormuz. Brent crude was quoted at $76.51 a barrel early Wednesday, up from $73.88 late Tuesday.
Iranian state media reported explosions around the Strait, including on Qeshm Island, in Sirik and in the port city of Bandar Abbas. Iran’s Revolutionary Guards also claimed to have struck US military facilities in Bahrain and Kuwait in retaliation.
The escalation came after Washington revoked a temporary sanctions waiver for Iranian oil, adding further pressure on Tehran as efforts to reach a final settlement continue.
Currency markets were softer for sterling. The pound was quoted at USD1.3355 early Wednesday, down from USD1.3376 at the London equities close on Tuesday. Against the euro, sterling slipped to EUR1.1693 from EUR1.1704.
The euro traded at USD1.1416, down from USD1.1427 late Tuesday. Against the yen, the dollar strengthened to JPY162.30 from JPY161.91.
In UK economic news, the decline in permanent job placements eased sharply in June, while demand for temporary workers strengthened to its fastest pace in more than three years, according to the latest KPMG and Recruitment & Employment Confederation report compiled by S&P Global.
The permanent placements index rose to 49.1 in June from 44.1 in May, moving closer to the 50-point level that separates expansion from contraction. Permanent salary growth also picked up, with the salaries index rising to 53.1 from 52.2, its fastest pace since January. Temporary wage growth accelerated to 52.9 from 51.4.
Geopolitics remained firmly in focus as US President Donald Trump arrived in Ankara for the Nato summit. Speaking alongside Turkish President Recep Tayyip Erdogan, Trump praised his relationship with the Turkish leader but criticised European allies over their response to the Iran conflict.
Trump also said Washington would consider selling F-35 fighter jets to Turkey, after Ankara was removed from the programme in 2019 following its purchase of a Russian missile defence system.
In the US on Tuesday, Wall Street closed lower. The Dow Jones Industrial Average fell 0.3%, the S&P 500 declined 0.5%, and the Nasdaq Composite dropped 1.2%.
In Asia on Wednesday, the Nikkei 225 in Tokyo was down 0.8%, despite data showing Japan’s current account surplus widened in May.
According to Japan’s Ministry of Finance, the current account surplus rose 20% year-on-year to JPY3.968 trillion, or around USD24.43 billion, from JPY3.321 trillion a year earlier. The figure was below consensus expectations but ahead of April’s surplus of JPY3.908 trillion.
Exports rose 15% year-on-year, while imports increased 8.1%.
In China, the Shanghai Composite was down 0.1%, while Hong Kong’s Hang Seng index rose 2.7%. Australia’s S&P/ASX 200 fell 0.5%.
Gold was quoted at USD4,126.60 an ounce early Wednesday, down from USD4,144.14 on Tuesday.
