Oil prices rise after EU agrees Russian sanctions
- FTSE 100 sinks 52 points to 8,792
- Oil rises on more intense threats between Israel and Iran
- Bank of England votes 6-3 to hold rates
- Today is 30th anniversay of AIM
4:45pm: FTSE 100 moves lower
A mix of macroeconomic uncertainty and geopolitical risks put pressure on the FTSE 100 on Thursday, causing the index to close about 52 points lower at about 8,792 points.
Continued conflict between Israel and Iran saw oil prices rally, with crude oil up more than 2% above $76 per barrel.
"Ongoing Israel-Iran missile attacks and the possibility of US involvement have increased worries of possible supply disruptions which pushed oil and gas prices to four-month highs," IG senior technical analyst Axel Rudolph said.
"Stock indices dropped while the gold price traded flat as silver and copper prices fell by around a percentage point amid the uncertainty."
Oil was up 2.3%, with crude about $76 per barrel.
4.15pm: UK economy fragile
The UK economy remains fragile and may require a more aggressive easing cycle than markets are currently pricing in, according to Mathieu Savary, Chief European Strategist at BCA Research.
“With services inflation easing and labour market momentum fading, the MPC is set to maintain a quarterly pace of rate cuts through year-end,” Savary noted.
He added that this outlook keeps BCA Research “biased toward lower UK rates, continued outperformance in gilts, and downside for sterling against the euro.”
3:40pm: European recruitment stocks slide after hays profit warning
Recruitment stocks in Europe fell sharply on Thursday after UK-based Hays (LON:HAYS) warned of a steep drop in profits.
The news also weighed on peers, with Page Group—seen as particularly exposed due to its 72% reliance on permanent hiring—falling about 6.5% to its lowest level since April. Randstad (AS:RAND) and Adecco (SIX:ADEN) shares also declined roughly 3.5% each.
Jefferies analysts described the results as especially negative for Page Group given the sector-wide softness.
2.45pm: AIM anniversary appreciation post
A reminder that today is the 30th anniversary of London’s junior market.
To celebrate, have a read of our editor’s AIM feature: ’AIM at 30: What it must do to secure the next three decades’.
Also any early investors in Wynnstay Properties (6,331%) total return since joining AIM in 1995, making it the best performer among AIM’s original members still quoted today, according to research by AJ Bell (LON:AJBA).
NWF Group: a 920% total return since 1995; Hiscox (LON:HSX), the insurer that started on AIM and is now a FTSE 100 name, delivering a 2,650% total return for early investors; Genus (LON:GNS), which also progressed from AIM to the FTSE 250 as another demonstration of the junior market’s main role as a launchpad for major growth.
"AIM has been called the ‘Wild West’ in the past and has had its fair share of disasters, yet it would be wrong to call the entire market a failure. It was designed to nurture growing companies, and the achievements of Hiscox and Genus prove it has been successful," says analyst Dan Coatsworth.
Others that have made the jump from AIM tiddler to the FTSE 250 or FTSE 100 include bookmaker Entain (LON:ENT) (started out as highly acquistive GVC Holdings), Future (see our feature on its ’path from a tiny computer games publisher to an ecommerce giant’), Melrose Industries (LON:MRON), Breedon Group, Domino’s Pizza Group, Safestore Holdings, Primary Health Properties and Big Yellow Group (LON:BYG).
Another notable alumni inlcude Booker, the wholesale retailer that moved from AIM to the main market before being acquired by Tesco (LON:TSCO) for £3.7 billion; Entertainment One, owner of Peppa Pig rights, moved to the main market and was later acquired by Hasbro for £3.3 billion; and Centamin (LON:CEY), the gold miner, moved from AIM to the main market and was recently acquired by AngloGold Ashanti (NYSE:AU) for £1.9 billion.
2.23pm: Govt ’ready’ to nationalise Thames Water if necessary
Environment Secretary Steve Reed has said the government is stepping up plans to temporarily nationalise Thames Water.
Reed rejected demands to waive Ofwat’s fines and said the ministers were ready to save the struggling utility giant if necessary, with reports suggesting a rescue via a special administration scheme "if that were to become necessary".
"The company remains financially stable, but we’ve stepped up our preparations and stand ready for all eventualities," he told the House of Commons, after US private equity giant KKR abruptly walked away from bidding for the company two weeks ago.
The UK’s largest water company’s creditors have proposed a £17 billion rescue plan, but they say this is only if Ofwat agreees to waive fines for the company.
1.56pm: FTSE 250 underperforming
The FTSE 100 is down 0.3% and FTSE 250 is almost 0.8% lower.
It’s not just a 10% drop for recruiter Hays (see below) that is weighing on the mid-cap index.
NCC Group PLC (LON:NCCG), the tech firm, is down 10% after announcing a strategic U-turn for its cyber security division after revenues fell in the first half of its financial year.
Cyber security turnover dropped 8%, which it said was due to a "decline in our high-volume, lower value testing and compliance engagements as clients reacted to macroeconomic uncertainties".
The division will shift towards "strategic higher value engagements".
Breedon Group is also down. Analysts at RBC have cut their forecasts, with a note out, saying rain and ice in the US, climate change challenges in Ireland and low ready mix volumes in GB have led to this.
"Temporary challenges may weigh on the share price, but in our mind the medium term investment case has not been derailed, and we would view any share price weakness as a buying opportunity."
1.19pm: North Sea U-turn from govt expected
Mid-tier oil and gas exploration stocks have been given a boost by signals that the UK government will move to unlock new drilling in the North Sea.
Minister Ed Miliband is preparing to lift legal barriers that had blocked major fossil fuel projects, reversing a January court decision that halted the Rosebank and Jackdaw fields.
The Scottish court had ruled the projects unlawful due to emissions regulations.
Miliband now plans to amend the law on greenhouse gas emissions, enabling the development of these fields and potentially reviving the UK’s North Sea oil sector.
Tullow Oil (LON:TLW) is up over 3$, Enquest (LON:ENQ) over 5% and Jersey Oil & Gas almost 15%.
12.36pm: Cautious approach of BoE expected, but not everyone happy
Views on the BoE are flooding in, as per normal on these days. Here’s a selection:
"The UK is not out of the woods in the fight against price growth. Food price inflation has surged in recent months, energy prices are up, and services inflation remains elevated, indicating a broad base of pressures. There are also several upside risks to prices, including increased domestic labour costs and potential spillovers from recent geopolitical uncertainty. On the whole, we expect the Bank to maintain a cautious approach to monetary easing, implementing just one further rate cut this year.” – Sam Miley, head of forecasting at the CEBR.
"As expected, the BoE left rates on hold with investors left largely expecting two further 0.25% cuts for the rest of the year and one further cut in 2026, thereby leaving the terminal rate at c. 3.50%. With the BoE navigating persistent services inflation, rising oil prices, and weakening economic data, it’s a tricky balancing act as to where the end-terminal rate may well be, as such a cautious approach is being taken." – Ed Hutchings, head of rates at Aviva (LON:AV) Investors.
"The Bank should have continued its rate cutting cycle, by lowering rates by 0.25 today. This year’s GDP growth has been lower than expected, in large part because interest rates are being kept high for long. Even when considering still elevated inflation, the Bank continues to run an overly restrictive policy, and it is harming ordinary households." – Carsten Jung, associate director for economic policy at IPPR.
"The Bank of England’s goal over the last two years has been to slowly bring down inflation without crashing the economy – achieving a so-called soft landing, that’s not easy at the best of times let alone when the economic data is unreliable. Official data suggests the Bank has so far done a pretty good job, with the UK labour market holding up well. The problem is that data has never been more unreliable, and elsewhere there are signs of strain... Conflict in the Middle East risks higher energy prices potentially pushing inflation higher – though calling the course of events there is almost certainly a mugs game, and the Bank has said that under current conditions it expects inflation to remain broadly at current levels for the rest of the year. The risk is that all the uncertainty leaves the Bank paralysed, with rates stuck at their current level. With uncertain data, policy setters will need a really compelling reason to hike or cut interest rates and that could result in default driven decisions." – Nicholas Hyett, investment manager at Wealth Club.
12.12pm: Pound dips as traders see higher chance of August rate cut
Traders have added to bets on a BoE rate cut in August, now seeing an 80% chance. This was around 60% earlier in the week.
This has put a little dent in the pound, which has flipped from being up slightly versus the dollar to down 0.1% at $1.3405 now, with a similar but smaller move against the euro.
The MPC minutes show that policymakers Swati Dhingra, Dave Ramsden and Alan Taylor voted to cut rates by 0.25 percentage points to 4%, the same three that have voted against the tide before (December).
A staff forecast now sees UK Q2 GDP growth of around 0.25% compared to Q1, up from May’s forecast of just 0.1%.
The MPC said it "will remain sensitive to heightened unpredictability in the economic and geopolitical environment" but said "recent global developments had not had a significant impact" on this meeting’s decision, though global uncertainty "remains elevated" and the escalated Middle East conflict has increased energy prices, while trade policy uncertainty will continue to hurt the UK economy.
The provisional staff analysis suggests the direct impact of US tariffs on global GDP could be smaller than expected last month.
12.01pm: BoE stands pat, 6-3 vote
The BoE’s monetary policy committee has kept Bank Rate unchanged at 4.25%, as expected.
Interestingly, the MPC voted by a majority of 6-3 to maintain rates.
Three members preferred to reduce Bank Rate by 0.25 percentage points, to 4%.
11.59am: Steady as she goes pre-BoE
The FTSE 100 is down 18 points, the pound is up 0.1% verus the dollar at $1.343 and similar versus the euro at £0.8545.
A couple of minutes before the Bank of England decision.
No change in rates is expected, but the vote split is the thing to watch, analysts and economists have been saying.
11.33am: Global growth forecasts revised, as long as no Iran escalation
Seeing the market’s mild reaction to the conflict in the Middle East, S&P Global Market Intelligence has raised its real GDP growth forecasts for 2025-26 in many economies and most regions, citing "more favorable financial conditions".
Front-running activity ahead of US tariffs has led to stronger-than-expected first quarter growth rates in many economies, but the report noted that this effect is already starting to unwind, though Fed caution over US inflation prospects is expected to linger.
However, the Israel-Iran situation is a live one, and if it escalates and leads to the closure of the Strait of Hormuz this could "materially shift" the near-term outlook for energy prices, inflation, financial conditions, and growth, says economist Ken Wattret.
"The reaction of commodity and financial markets to the Israel-Iran conflict has been relatively muted so far, but escalation could materially change the economic outlook," he adds.
"The impact on major equity indices and sovereign bond markets has been modest, so too the boost to safe-haven assets like the Swiss franc and gold prices. All will be highly sensitive to signs of escalation of the conflict."
In a severe conflict escalation scenario, Wattret says this would point to "large output losses versus baseline in the Middle East, Asia-Pacific and Europe - given the importance of energy supply from Gulf producers".
Absent that, the UK growth is still seen at 1.1% in 2025, with a fall to 0.8% in 2026, improved from previous forecasts of 0.6%.
US growth forecasts are unchanged this year at 2.8%, with next year’s growth upped to 1.4% from 1.3%, with China’s growth of 5% this year now seen falling to 4.3% next year from 4.0% previously.
Global growth is seen falling from 2.8% this year to 2.3%, compared to 2.2% previously.
11.10am: FTSE cuts losses
Losses for the FTSE 100 are being pared back, in line with similar moves across other European benchmarks.
The London index is down 0.2% now, compared to 0.5% earlier, while corresponding gauges in Frankfurt and Paris are down 0.4% and 0.65% versus close to 1% declines in early trading.
Oil, defence & aerospace, utilities and grocers are the positive forces setting the UK index apart, suggesting a desire from investors for ’defensive’ style investments.
Oil giants BP (LON:BP) and Shell (LON:SHEL) were among the top 10 risers as oil prices maintained support around four-month highs.
Utilities Vodafone (LON:VOD), BT (LON:BT) and Centrica (LON:CNA) are also in there too, with the former having lined up a new chief financial officer to take over this autumn, who looks like prime CEO succession material too.
Grocers Sainsbury (LON:SBRY), Tesco are also among the risers, along with deence contractor Babcock International (LON:BAB), with the grocers
10.32am: Risers and fallers, mostly fallers in fact
Revolution Beauty shares tanked 22% on the news that Frasers has pulled out of the running in a potential takeover battle.
The company’s need to raise new money and the formal sale process has raised two possible scenarios, AJ Bell’s Russ Mould speculates: "One is that Frasers has found some skeletons in the closest and is betting on Revolution Beauty going bust, which would mean it could potentially buy the business at a much cheaper price out of administration.
"The other is that Revolution Beauty needs a significant amount of money to dig it out of a hole and Frasers simply isn’t prepared to make that investment," he says, noting that while this is "all pure speculation", Frasers’ withdrawal has spooked investors.
Another potential buyers is Boohoo (LON:DEBS), as it owns a 29% stake, but is trying to fix its own problems. It’s shares are down 1.2% today.
Among other movers, Kenmare Resources has also sunk 22% after takeover talks ended with a consortium that included private equity firm Oryx Global Partners and its former chief executive, Michael Carvill.
The titanium miner said discussions were terminated after the consortium proposed a significantly lower price than its earlier approach and asked for more time to secure financing, which was rejected.
Litigation Capital Management has seen its shares crumble 26% after a court defeat in one of its funded cases, as well as flagging a sharp slowdown in investment returns in the second half of the financial year.
The High Court in London ruled against LCM’s client in a commercial dispute, resulting in a write-down of the company’s share of the investment. LCM had committed £3.4 million of its own capital to the case, alongside a further £8.2 million from its Fund I vehicle.
Elsewhere, in an Aquis-listed corner of the small-cap scene, The Smarter Web Company has signed a deal with broker Shard Capital that could see the bitcoin treasury specialist issue up to £87 million of new shares in stages as it pursues a mix of organic growth and acquisitions.
A couple of investment trust updates.
Cordiant Digital Infrastructure has reported results showing a 9% rise in earnings and said it expects continued growth in the current year, supported by strong demand for digital networks and data services.
Significant new contracts and renewals have been secured with both government and corporate clients, it said, boosting confidence about the prospects for its portfolio of telecom and broadcast assets across Europe.
NextEnergy Solar Fund (LON:NESF) has cut the fees it pays to its investment manager in a move aimed at improving returns for shareholders and addressing concerns about the fund’s persistent discount to net asset value.
9.49am: Hays takes a tonking
The recruiter sounded the earnings alarm earlier, leading to a 14% drop in the share price as it cited subdued hiring activity for its current woes.
The company now expects pre-exceptional operating profit of around £45 million for the year to June, down from the analyst consensus of £56.4 million. Ouchy-do.
"Expect tough market conditions to continue into [the next financial year]," said Panmure Liberum.
Turning to the wider market, the FTSE 100 retrieved some of the ground lost earlier in the session, as it drifted from a 41-point loss to 29 29-point deficit.
Still, the spectre of US involvement in the Iran-Israel conflict has the dealers’ nerve-ends jangling. Given the Footsie’s bias towards natural resources, BP and and Shell’s early buoyancy is likely preventing a steeper slide into the red.
9.03am: Swiss go to zero, gold not joining oil
In the first interest rates news of the day, Switzerland’s central bank has cut rates to zero due to disinflation.
Elsewhere, while oil is up, the price of gold is falling despite its traditional role as a safe haven investment in times of heightened geopolitical tension.
Gold slipped to $3350 an ounce this morning, from $3447 at the end of last week, which has put a dent in the shares of precious metals miners.
Endeavour and Fresnillo (LON:FRES) are down 1.4% on the FTSE 100, while mid-cap peer Hochschild is down 3.7%.
Other miners are also lower, with Antofagasta (LON:ANTO), Glencore (LON:GLEN) and Anglo American (LON:AAL) all sliding 2% this morning.
"Geopolitics is still front and centre for markets even as we are in the midst of a busy central bank week," says market analyst Neil Wilson at Saxo.
"The Israel-Iran conflict is now being viewed by investors through the lens of whether the US gets involved or not. President Trump says that he ’may or may not’ strike Iran, but the mood music seems to be martial in its drumbeat."
In company news, Wilson points to a "shocker" of a report from recruiter Hays this morning, sending shares down 13%.
8.44am: Oil rising again
Oil prices are back on the rise, as Israel and Iran engage in a war of words and missiles.
Brent crude is up 0.8% today to $77.29 a barrel, while US WTI climbs 1.1% to $76.
This comes as Israel’s defence minister, Israel Katz, said he had instructed the military to intensify strikes on strategic-related targets in Tehran in order to eliminate the threat to Israel and to destabilise the “Ayatollah regime”.
One newswire reported that he had made a direct threat of assassination of the Ayatollah, something that Donald Trump has been said to be against earlier this week.
In turn, Iran’s deputy foreign minister said: if the US actively intervene to support Israel, Tehran will have to use its tools to defend itself and "teach aggressors a lesson", the ISNA news agency reported.
Iran’s atomic energy organisation also says Israel attacked its Khondab research reactor and heavy water complex "in renewed violation of international law", the Islamic Republic News Agency said.
8.27am: US update
Quick update on the Fed from last night (also, US stock and bond markets are closed today for the Juneteenth holiday to commemorate the end of slavery).
The impact of tariffs on inflation was cited by Federal Reserve chair Jerome Powell at the press conference, after rates were kept unchanged as widely expected.
"Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs, because someone has to pay for the tariffs," Powell said, as the Fed raised its year-end inflation forecast to 3.1% from 2.8% and lowered its 2024 growth forecast to 1.4% from 1.7%.
While the ’dot plot’ of future rate expectation still shows a median view by Fed voters of two rate cuts this year – that "doesn’t tell the full story", says market analyst Ipek Ozkardeskaya at Swissquote Bank.
"There’s now a growing divide within the Fed: while 8 members expect rates to fall by 50bp (matching two cuts), seven see no change – up from just four at the previous meeting. Two members anticipate one cut. That’s now almost a 50-50 split between no cuts and a 50bp reduction."
The market reaction to the Fed decision "wasn’t exactly cheery", she says, with S&P 500 falling after the decision, though the US 2-year Treasury yield eased.
Fed funds futures showed a slightly higher probability of a September cut than before the meeting, as Ozkarkeskaya says, "investors seem inclined to see the glass half full – hoping for two cuts – rather than half empty, with none."
8.16am: FTSE starts lower
London’s blue chip-index has dropped 31 points at the open to 8,812.
Despite oil giants Shell and BP topping the leaderboard, up 1.4% and 1.5%, there are falls from miners to offset this, plus some large companies’ shares going ex-dividend.
Builder Persimmon (LON:PSN) is leading the declines, followed by water company United Utilities (LON:UU), as their shares go ex-dividend. Airtel Africa (LON:AAF), 3i (LON:III) Group, Experian (LON:EXPN) and Compass Group (LON:CPG) shares are also ex-div today.
Whitbread (LON:WTB) is down 2.3% after its Q1 update showed slower sales in recent weeks.
7.56am: FTSE 100 futures sink lower
Footsie futures on the IG spread-betting platform are now pointing to a 31-point loss with initial trading seconds away.
On the wires, there are reports of heavy Israeli shelling of Iran.
According to a Bloomberg report overnight, the US is apparently eyeing this weekend for a possible Iran attack, while a WSJ story had it that President Trump told senior aides he approved of attack plans but was holding off on giving the final order to see if Tehran would abandon its nuclear program.
Iran’s Fordo nuclear facility is a key target and "there is now a movement to get ready for this", sources told ABC.
Meanwhile, Shell has contingency plans in case the conflict disrupts oil and gas flows, Bloomberg reported.
7.48am: Whitbread looks disappointing
Whitbread PLC (LSE:WTB) has reported what looks to be worse numbers than the market was expecting.
In the UK, its Premier Inn hotel chain saw total accommodation sales in the first quarter fall 2% on last year, while revenue per available room (revPAR) was down 2%.
The FTSE 100 company said this was ahead of the wider ’midscale and economy’ market by 1.7 percentage points on accommodation sales and 1.6pp on revPAR.
Food and beverage sales were down 16%, which it said was expected as chief executive Dominic Paul’s growth plan looks to prioritise new rooms and to drivie higher financial returns.
In Germany, the hotel chain saw accommodation sales increase 16% in local currency or 15% in sterling terms, while revPAR rose 12%, including 17% for more established hotels, which it was noted was also "significantly ahead" of the wider M&E market.
7.32am: Frasers pulls out of Revolution running
Mike Ashley’s Frasers Group PLC (LSE:LON:FRAS) has said it does not plan to make an offer for Revolution Beauty Group PLC (AIM:REVB).
But the FTSE 250-listed retail said it could change its mind if a third party makes a swoop or there a "material change of circumstances".
7.15am: FTSE 100 set to fall at open
The FTSE 100 has been called lower on Thursday, ahead of the Bank of England meeting later and with conflict in the Middle East creating an elevated level of risk that is hitting Asian stocks this morning.
A fall of 15 points for London’s blue-chip index was the reading on the futures market, after a gain of just over nine points yesterday left it at 8,843.47.
US stocks saw early gains mostly wiped out overnight, after the Federal Reserve kept rates steady and futures indications on the Fed ’dot plot’ were largely unchanged.
In Asia, stocks are sharply lower, led by a near 2% decline for the Hang Seng in Hong Kong and 1% decline in Tokyo for the Nikkei.
5.30am: What to watch on Thursday 19 June
It’s Bank of England meeting day.
However, while hopes have been rising that the monetary policy committee will cut interest rates again soon, due to a loosening jobs market revealed last week and mixed CPI inflation numbers yesterday, no cut is predicted this week.
But there will be potential signals to watch in the MPC statement, which comes out that could indicate how the committee will vote at the next meeting.
In company news, investors will be able to check in with Premier Inn hotels operator Whitbread PLC (LSE:WTB) to see if recent trading has improved following a sluggish start revealed six weeks ago.
Some analysts suggested this week that the key revenue per available room figure may not be as bad as the FTSE 100 company previously indicated.
Announcements due:
Trading update: Whitbread
Interims: LPA Group, NCC Group
Finals: Cordiant Digital Infrastructure, First Property Group, Syncona, XPS Pensions Group
Economic announcements: Bank of England Policy Decision (UK), Initial Jobless Claims (US)
FTSE 100 ex-dividends to reduce index: 5.65 points (3i Group, Experian, Compass Group, United Utilities, Persimmon, Airtel Africa)