The FTSE 100 edged lower on Thursday, paring heavier early losses as investors grappled with mounting uncertainty over the Middle East conflict and its implications for global markets.
The FTSE 100 closed down 19.45 points, or 0.2 per cent, at 10,457.01, having earlier fallen to an intraday low of 10,361.45.
Mid-cap stocks fared worse, with the FTSE 250 dropping 207.49 points, or 0.9 per cent, to 22,764.52. The AIM All-Share also declined, slipping 0.7 per cent.
Sentiment remained fragile as Donald Trump struck an increasingly combative tone over the crisis. The US President said he had ordered the Navy to “shoot and kill” any vessels suspected of laying mines in the Strait of Hormuz, a move that risks further escalation in one of the world’s most critical energy chokepoints.
The US Central Command confirmed it had already ordered 31 vessels to turn back or return to port since the blockade began, while the US Department of Defence said American forces had boarded a tanker in the Indian Ocean suspected of carrying Iranian oil.
Despite the heightened rhetoric, there were tentative signs of diplomatic progress. Reports suggested an Iranian source had indicated preparations for talks with Washington in Pakistan could lead to a breakthrough within days, offering a potential route to de-escalation.
Analysts said conflicting signals from both sides were leaving investors cautious. Dan Coatsworth, of AJ Bell, said the “mixed messages” around peace negotiations were dampening risk appetite, with markets increasingly focused on downside risks.
Energy markets reflected those concerns. Brent crude climbed to $103.25 a barrel, up from $101.42 at the previous London close, as traders priced in the possibility of prolonged disruption.
Joshua Mahony, chief market analyst at Scope Markets, warned that markets may be entering a phase where oil prices grind higher rather than reacting sharply to individual developments.
“Previous moves were driven by escalation and de-escalation,” he said. “Now we may be looking at a more sustained rise if the conflict drags on.”
The prospect of persistently higher energy costs, combined with geopolitical uncertainty, is likely to keep pressure on equities in the near term, even as markets show resilience in the face of ongoing volatility.
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