British shares moved lower on Thursday, tracking wider European declines after U.S. President Donald Trump said Washington would strike Iran "extremely hard" in the coming weeks if Tehran did not accept a deal, contributing to subdued investor appetite before the Easter holiday.
By 10:00 GMT the FTSE 100 was down 0.1%. Currency markets reflected risk-off flows, with the British pound falling 0.8% against the dollar to 1.3200. Major continental indexes recorded larger falls - Germany's DAX slid 1.7% while France's CAC 40 dropped about 1%.
Speaking from the White House, the president said the United States remained in negotiations with Iran but repeated a threat to strike Iran's electricity infrastructure should Tehran reject a deal. "We’re going to hit them extremely hard over the next two to three weeks… we’re going to bring them back to the stone ages," he said, adding that the U.S. was close to completing "all of America’s military objectives shortly." These comments contributed to a dampening of sentiment across European markets heading into the holiday.
UK developments
Domestically, a Bank of England survey of corporate finance chiefs pointed to higher price expectations over the coming year. The Decision Maker Panel - a monthly poll of chief financial officers from small, medium and large UK businesses - showed that year-ahead price inflation expectations rose to 3.5% in the three months to March, up 0.1 percentage points from the three months to February. On a monthly basis the survey recorded a larger uptick, with expectations moving from 3.4% to 3.7% between February and March.
Separately, discussions between the regulator Ofwat and the UK's largest water firm are reported to be nearing a settlement that would spare the utility additional financial penalties through 2030 by accepting formal undertakings instead of fines. Sources familiar with the talks said the regulator is expected to accept such undertakings, though the company could still face financial penalties from the Environment Agency and potential legal action.
Energy group SSE PLC tightened its full-year adjusted earnings per share guidance on Thursday, narrowing the range to 147-152 pence and moving toward the top end of its prior 144-152 pence forecast. The company said network capital investment rose 60% year-on-year and confirmed approximately around 3.5 billion for the year ended March 31, and said adjusted net debt and hybrid capital were expected to exceed 10 billion.
The company noted that five of its 11 major electricity transmission projects are in construction and that 26 of the 34 required major consents have been received. SSE said full-year results are scheduled for release on May 28.
What this means for markets
- Geopolitical comments from Washington have sharpened risk concerns across European equities and currency markets, contributing to a modest decline in the FTSE 100 and a weaker pound.
- Rising price expectations among UK businesses suggest firms anticipate higher inflation over the coming year, a factor relevant to consumer-facing sectors and input-cost sensitive industries.
- Regulatory negotiations in the utilities sector and heavy capital spending at major energy groups underline ongoing policy and balance-sheet considerations for investors in regulated infrastructure and energy firms.