British stocks fell on Friday as renewed military friction between US and Iranian forces in the Strait of Hormuz unsettled market participants. By 03:20 ET (07:20 GMT) the FTSE 100 had slid 0.81%, while sterling held relatively steady, with GBP/USD edging up 0.13% to 1.3584. Across continental Europe, Germany’s DAX declined 1.% and France’s CAC 40 dropped 0.8%.
Tensions intensified after the United States said three destroyers transited the strait while coming under attack from fast boats, missiles and drones, but sustained no damage. In response to the incident, the US president said: "They trifled with us. We blew them away." He also maintained that peace negotiations with Tehran were "going very well" and warned that any refusal by Iran to sign a deal quickly could prompt future military action that would be "a lot harder, and a lot more violently."
UK corporate and economic developments
In corporate news, Intertek turned down a sweetened takeover bid from Swedish private equity firm EQT worth £8.93 billion, saying the offer materially undervalued the product testing company and posed unacceptably high execution risk. The board’s decisive rejection signals confidence in Intertek’s prospects as an independent business despite the sizeable premium that had been proposed.
IAG, the owner of British Airways, warned on Friday that full-year profits would fall short of earlier expectations. The group attributed the revision in part to sharply higher jet fuel costs related to the Iran conflict and attendant supply disruptions, which are now weighing more heavily on earnings than previously anticipated. The downgrade highlights the way the Middle East hostilities are beginning to affect European airlines’ margins.
Housing data from Halifax showed UK house prices edged down 0.1% in April, leaving annual growth at just 0.4%, below economists’ forecasts of 0.6%. The modest decline points to ongoing affordability pressures for British buyers as higher borrowing costs and broader uncertainty damp demand.
Swiss chemicals maker Clariant reported first-quarter adjusted EBITDA of 160.2 million Swiss francs, marginally below analyst forecasts of 162 million. Management said the US-Iran conflict disrupted demand from its catalysts customers across the Middle East and Asia. Clariant preserved its full-year guidance but cautioned that rising input costs and elevated volatility remain headwinds.
Political shift reflected in English local elections
The Labour Party suffered substantial losses in Friday’s English local elections, with Keir Starmer’s party losing ground across traditional strongholds in central and northern England only two years after its national landslide. The principal beneficiary was Nigel Farage’s Reform UK, which captured more than 300 council seats and is positioned to become a significant opposition force in Scotland and Wales.
Market implications
The combination of heightened geopolitical risk and company-specific developments contributed to the downshift in sentiment. Energy and aviation exposures are directly affected by higher fuel costs and potential supply interruptions, while industrial names with Middle East-facing customers have reported demand disturbances. At the same time, domestic housing affordability and political volatility added further texture to the market outlook.