London pre-open: Stocks seen up as oil prices rise on Middle East tensions
London stocks were set to open up on Wednesday, with oil prices on the rise as tensions in the Middle East escalated further.
The FTSE 100 was called to open around 15 points higher.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The geopolitical tensions in the Middle East intensified after Iran has reportedly fired about 200 missiles on Israel as response to Israeli attacks on Hezbollah in Lebanon. Israel said it will retaliate. The involvement of Iran could in fact lead to a wider and a more serious conflict across the region, and threaten oil supply.
"This is why, the barrel of US crude gained more than 3.50% yesterday but fell short of clearing offers above the $72pb level, the major 38.2% Fibonacci retracement on July - September retreat that should distinguish between the actual bearish trend and a medium-term bullish reversal.
"Looking back, it’s been almost a year since the war in Gaza began. The first months of the war pushed oil prices higher, yet the conflict had little sustainable impact beyond April, when traders started giving more weight to the slowing Chinese and world economy than the supply disruptions -considering that the world was fed enough oil from the Middle East and elsewhere to worry about the Middle East disruptions.
"But if Iran - which produces around 3 million barrels per day - gets seriously involved in the conflict, we could see the price of a barrel remain under positive pressure for a prolonged period."
In corporate news, JD Sports Fashion held annual guidance after delivering a 2% rise in half-year profit despite what it called a "volatile market".
The company reported profit before tax and adjusting items of £405.6m for the six months to 3August, compared with £398m a year earlier. Revenue jumped 5.2% to £5bn.
Europe-focused building products and specialist insulation supplier SIG reiterated full-year profit guidance after a sequential improvement in like-for-like revenue performance in the third quarter.
LFL sales were down 4% in the three months to 30 September, compared with the 7% decline reported in the first half. However, the company said it still saw weak demand across the majority of its markets due to "ongoing software in the European building and construction sector".