British equity markets opened in negative territory on Tuesday as geopolitical tensions in the Gulf region intensified and oil prices held near multi-year highs. At 03:10 ET (07:10 GMT), the FTSE 100 was down 1.05%. Sterling was broadly unchanged against the dollar at 1.3539. In continental Europe, Germany’s DAX inched up 0.05% and France’s CAC 40 rose 0.13%.
Oil extended gains after a sharp intraday move on Monday. Brent crude surged to $114.44 before easing slightly to around $113 in early Tuesday trading as markets digested a heightened risk of renewed large-scale conflict following signs the fragile ceasefire may be unraveling.
The immediate catalyst for the latest market reaction was a sequence of missile and drone strikes on the United Arab Emirates that Abu Dhabi said it had intercepted. Officials reported downing 15 missiles and four drones, and a subsequent fire was reported at an oil facility in Fujairah port. Iran has denied responsibility for the strikes, describing the incident as the product of American "military adventurism." The UAE condemned the strikes as "treacherous" and said it reserved the right to retaliate.
At sea, confrontations escalated. Two U.S. Navy destroyers reportedly transited the Strait of Hormuz while under sustained Iranian assault, with Apache and Sea Hawk helicopters providing cover. CENTCOM said more than 100 aircraft are now committed to "Project Freedom," the U.S. operation to escort commercial vessels through the waterway. Despite that effort, ship-tracking websites show that traffic through the strait remains largely suspended.
U.S. President Donald Trump signalled no inclination to step back from a muscular stance. "We have more weapons and ammunition at a much higher grade than we had before," he told Fox News. "We have stuff all over the world. We have these bases worldwide. They’re all stocked up with equipment. We can use all of that stuff, and we will, if we need it." He also urged South Korea to consider joining the escort mission after Iran struck a Seoul-operated cargo ship near the UAE coast. "Perhaps it’s time for South Korea to come and join," Trump wrote on Truth Social.
Iranian officials issued contrasting messages. Parliament speaker Mohammad Bagher Ghalibaf warned that "a new equation of the Strait of Hormuz is in the process of being solidified," adding, "we have not even begun yet." Foreign Minister Abbas Araghchi took a less bellicose tone, saying the situation made it "clear that there’s no military solution to a political crisis."
UK corporate roundup
In corporate news affecting the UK market, Vodafone agreed to acquire CK Hutchison’s 49% stake in their VodafoneThree joint venture for £4.3 billion, taking full ownership of the UK’s largest mobile network operator, which serves more than 28 million customers.
HSBC released first-quarter results showing pretax profit of $9.4 billion, narrowly missing analyst estimates. The bank reported an unexpected $400 million loss tied to a UK fraud case, which pushed expected credit losses up to $1.3 billion.
Market context and immediate implications
The combination of higher oil prices and the prospect of disrupted shipping through the Strait of Hormuz contributed to risk-off sentiment in equity markets. Energy price pressure and the security of marine transport routes are central to how investors and companies assess the near-term economic impact of the confrontation.
Data points repeated from early trading:
- FTSE 100 -1.05% at 03:10 ET (07:10 GMT)
- Sterling around $1.3539
- Brent crude reached $114.44 on Monday and traded near $113 in early Tuesday session
- DAX +0.05%, CAC 40 +0.13% in early European trading
The evolving security picture in the Gulf and the response from military forces at sea, combined with corporate developments at home, are the proximate drivers of market moves observed at the open. How long markets remain sensitive to these developments will depend on the trajectory of hostilities and any further disruptions to oil flows or shipping lanes.