London equity markets rose modestly on Thursday as traders awaited a near-certain European Central Bank interest-rate increase. Geopolitical developments in the Persian Gulf - including reports of strikes along Iran's southern coast and damage to U.S. military aircraft - combined with lingering strength in crude prices to temper risk appetite.
By 03:18 ET (07:18 GMT), the FTSE 100 had gained 0.06%. Across the Channel, Germany's DAX rose 0.12% and France's CAC 40 advanced 0.30%. Sterling traded at $1.3554, up 0.07% on the day.
Geopolitical developments in the Gulf
Iranian state media reported multiple projectiles struck areas along Iran's southern coastline in Sirik early Thursday, with explosions also recorded across Minab County and Qeshm Island. Shipping activity through the Strait of Hormuz showed signs of disruption in the immediate aftermath: preliminary ship-tracking data cited by Reuters indicated vessel transits fell to seven on Wednesday from 12 the prior day, well below a 10-day average of 14. Some vessels were reported to have transponders turned off, suggesting the transit count may understate actual traffic.
In parallel, CBS News reported that multiple U.S. military aircraft were damaged in Iranian ballistic missile strikes on the Al Azraq airbase in Jordan early Wednesday. Sources cited by the broadcaster said roughly eight F-15s sustained light damage and were returned to service, while an A-10 Thunderbolt lost a wing. U.S. forces reportedly fired more than 30 Patriot missiles in response. Iran's Islamic Revolutionary Guard Corps described the strikes as retaliation for the United States hitting five Iranian oil tankers on Tuesday.
Speaking on Wednesday at the Republican midterm convention in Dallas, U.S. President Donald Trump said Washington was "winning" the conflict and predicted oil prices would fall once the war ended after November's elections, while leaving open the possibility of negotiations.
Market reactions and analyst commentary
Oil markets remained elevated amid the unrest. Brent crude futures for November delivery eased 0.37% to $100.89 a barrel, while U.S. West Texas Intermediate for October slipped 0.23% to $95.83.
Gold showed mixed signals: December gold futures fell 0.08% to $4,456.97 an ounce, while spot gold rose 0.26% to $4,413.22.
ING analysts said current indicators "point to further escalation, keeping upside pressure firmly in place," and cautioned that any substantive interruption to flows through Hormuz could tighten the oil market "more sharply" than recent weeks have implied. The broker also highlighted increased Chinese buying activity in the physical oil market, particularly in the North Sea, as an additional bullish factor - while noting that Chinese crude imports remain well below year-ago levels and that Beijing's buying patterns will be "crucial to the outlook."
Policy calendar and political developments
Investors were focused on the ECB's impending decision. A 25-basis-point hike across all three benchmark rates was widely priced in as near-certain.
On foreign policy, British Foreign Secretary Ed Miliband condemned Israel's decision to close London's consulate in Jerusalem as "regrettable and damaging." Meanwhile, UN special rapporteur Francesca Albanese described a UK-led ban on illegal Israeli settlement imports as "potentially seismic," saying the policy should also cover East Jerusalem and Gaza in addition to the West Bank.
UK corporate round-up
- AB Foods - The owner of Primark said the retailer will introduce UK home delivery. AB Foods also said like-for-like sales are expected to fall 3% in the fourth quarter to September 12.
- Currys - The consumer electronics retailer reported 7% like-for-like sales growth in Q1, attributing the increase to strong demand for cooling products during the summer heatwave and expansion in the Nordics.
- THG - The beauty and tech group reported that H1 adjusted EBITDA more than doubled to A342.8 million, but warned that new EU parcel duties would slow third-quarter revenue growth to around 2%.
Overall, markets moved cautiously as investors balanced the near-term certainty of an ECB rate hike against the uncertain consequences of heightened tensions in the Persian Gulf and mixed corporate updates at home. Oil and shipping-sensitive sectors remain particularly exposed to developments around the Strait of Hormuz, while financial markets were also watching for policy cues from the ECB.