London midday: Stocks lower on Middle East tensions as risk appetite fades

UK stocks were firmly in the red on Friday as traders reacted to rising tensions in the Middle East, with oil markets volatile as news continued to emerge from the region.

By the midday mark, the FTSE 100 was down 0.6% at 7,830.

"Recent political developments have created a sense of uncertainty in financial markets," said Stephen Innes, managing partner at SPI Asset Management.

Israel reportedly struck a target in the central Iranian province of Isfahan, where the country's nuclear installations are located, in response to an Iranian attack with over 300 drones and missiles last weekend.

However, mixed reports have created some uncertainty about the real impact of the attack, with oil prices reacting in turn – swinging from huge gains to losses in morning trade as investors digested ongoing newsflow.

Oil prices had erased earlier gains to drop 0.6% to $86.59 a barrel by lunchtime, having surged as high as 4.2% early on to $90.75.

"The initial reports suggested that the explosion happened at a significant nuclear facility, which initially raised concerns in market circles. In turn, traders responded in classic reflexive risk-off fashion. However, the main question now is whether Iran will retaliate and how it will impact the Middle East political landscape," Innes said.

Also weighing on sentiment early on were comments from New York Federal Reserve president John Williams overnight, who warned that monetary policy tightening might be necessary in light of resilient economic data. "If the data are telling us that we would need higher interest rates to achieve our goals, then we would obviously want to do that," he said.

Market movers

FTSE 250-listed investment management firm Man Group dropped 5% after net outflows during the first quarter caught investors by surprise. Assets under management rose by 5% from the preceding three months, as a $9.8bn positive swing in investment performance outweighed $1.6bn in net outflows. However, consensus forecasts were for positive net flows of $1.3bn.

Travel and airline stocks were pulling back after a strong performance the previous session as oil prices continued to be volatile, with IAG, Wizz Air, easyJet and TUI all out of favour.

Utility stocks were among the best performers of the day as trading shelved riskier asset in place for defensive sectors, with United Utilities, National Grid and Severn Trent putting in decent gains.

Meanwhile, retailers were under the cosh after economic data showed UK retail sales were flat in March, undershooting expectations. According to figures released by the Office for National Statistics, retail sales were unchanged on the month following a revised 0.1% jump in February and versus expectations for a 0.3% increase. JD Sports, M&S, B&M and Sainsbury were among the biggest fallers on the Footsie.

Market Movers

FTSE 100 (UKX) 7,829.82 -0.60%
FTSE 250 (MCX) 19,282.03 -0.87%
techMARK (TASX) 4,377.48 -0.27%

FTSE 100 - Risers

Croda International (CRDA) 4,916.00p 1.38%
United Utilities Group (UU.) 1,030.00p 1.13%
Coca-Cola HBC AG (CDI) (CCH) 2,432.00p 0.91%
BAE Systems (BA.) 1,298.00p 0.85%
Unilever (ULVR) 3,802.00p 0.85%
Haleon (HLN) 323.80p 0.81%
Severn Trent (SVT) 2,437.00p 0.74%
Compass Group (CPG) 2,184.00p 0.69%
National Grid (NG.) 1,037.00p 0.68%
Airtel Africa (AAF) 107.40p 0.56%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 116.00p -3.57%
Scottish Mortgage Inv Trust (SMT) 800.00p -2.94%
B&M European Value Retail S.A. (DI) (BME) 506.80p -2.54%
Marks & Spencer Group (MKS) 244.10p -2.44%
RS Group (RS1) 685.00p -2.28%
Intermediate Capital Group (ICG) 1,980.00p -2.17%
Pershing Square Holdings Ltd NPV (PSH) 3,792.00p -2.12%
Ocado Group (OCDO) 342.70p -2.09%
Beazley (BEZ) 656.50p -2.01%
Sainsbury (J) (SBRY) 258.00p -1.75%

FTSE 250 - Risers

Darktrace (DARK) 475.40p 3.71%
Hochschild Mining (HOC) 153.20p 1.46%
Endeavour Mining (EDV) 1,751.00p 1.33%
Bakkavor Group (BAKK) 117.50p 1.29%
Wood Group (John) (WG.) 152.40p 0.93%
Auction Technology Group (ATG) 504.00p 0.90%
Telecom Plus (TEP) 1,600.00p 0.88%
Ferrexpo (FXPO) 47.00p 0.86%
Plus500 Ltd (DI) (PLUS) 2,118.00p 0.86%
Johnson Matthey (JMAT) 1,765.00p 0.68%

FTSE 250 - Fallers

Man Group (EMG) 254.60p -5.21%
Discoverie Group (DSCV) 665.00p -3.76%
Marshalls (MSLH) 259.00p -3.54%
Dr. Martens (DOCS) 67.85p -2.86%
Paragon Banking Group (PAG) 666.50p -2.77%
Trustpilot Group (TRST) 183.80p -2.75%
Allianz Technology Trust (ATT) 330.00p -2.65%
Asia Dragon Trust (DGN) 347.00p -2.53%
Kier Group (KIE) 123.80p -2.52%
JPMorgan Japanese Inv Trust (JFJ) 499.00p -2.35%