London’s FTSE 100 rose strongly into the close on Friday in volatile trading, as rumours and uncertainty surrounding the Middle East sparked sharp market moves.
The FTSE 100 closed up 71.50 points, 0.7%, at 10,436.29.
The blue-chip index traded as high as 10,465.24 and as low as 10,287.90 on Friday.
The FTSE 250 ended down 45.89 points, 0.2%, at 21,642.30, and the Aim All-Share fell 4.64 points, 0.6%, to 734.61.
For the week, the FTSE 100 rose 4.7%, the FTSE 250 firmed 1.6% and the AIM All-Share added 1.9%.
Stocks initially nursed hefty falls after US President Donald Trump threatened further heavy strikes on Iran, although he signalled that the US was “very close” to achieving its military objectives.
Tehran responded by warning the US and Israel to expect “more crushing, broader, and more destructive actions”.
The address by Mr Trump late on Wednesday in the US dampened hopes of de-escalation that had buoyed markets on Wednesday.
“Investors didn’t get what they wanted from President Trump’s address to the American people and have reacted accordingly,” said AJ Bell investment director Russ Mould.
“Famously, uncertainty is kryptonite for the markets and between the contradictory messages from Trump, disputed claims on both sides, and the lack of clarity on a plan which can provide a resolution to the conflict they are getting a heavy dose of it right now.”
But mid-afternoon UK time, the FTSE 100 pushed higher and US and European markets pared losses as Bloomberg, and others, noted a report by Iran’s state-run IRNA that Iran is drafting a protocol with Oman to monitor traffic through the Strait of Hormuz.
CNBC said according to a translation of IRNA’s report that ship traffic through the key global oil transit route “should be supervised and coordinated” with the two countries, quoting Kazem Gharibabadi, Iran’s deputy minister of legal and international affairs.
“Of course, these requirements will not mean restrictions, but rather to facilitate and ensure safe passage and provide better services to ships that pass through this route,” Mr Gharibabadi reportedly said.
Brent oil traded higher 106.75 dollars a barrel on Thursday afternoon, up from 101.83 dollars late on Wednesday, but well below earlier highs of closer to 110 dollars a barrel.
In European equities on Thursday, the CAC 40 in Paris closed down 0.2%, while the Dax 40 in Frankfurt fell 0.6%, both well above early lows.
Stocks in New York were slightly lower, but well ahead of earlier levels.
The Dow Jones Industrial Average was down 0.2%, but jumped 600 points on the Iran/Oman reports.
The S&P 500 index was down 0.1%, as was the Nasdaq Composite.
On Thursday, the UK hosted talks featuring 35 nations to discuss how to reopen the Strait of Hormuz, through which a fifth of global oil normally travels.
UK Foreign Secretary Yvette Cooper condemned “Iranian recklessness” for “hitting global economic security”.
She said: “Iranian recklessness towards countries who were never involved in this conflict… is not just hitting mortgage rates and petrol prices and the cost of living here in the UK and in many different countries across the world, it is hitting our global economic security.”
Ms Cooper insisted that “diplomatic and international planning measures” were currently the focus for the countries seeking to re-open the sea passage.
The yield on the US 10-year Treasury narrowed to 4.30% on Thursday from 4.31% on Wednesday.
The yield on the US 30-year Treasury was unchanged at 4.89%.
The pound fell to 1.3238 dollars on Thursday afternoon from 1.3324 dollars at the equities close on Wednesday.
Against the euro, sterling eased to 1.1463 euros from 1.1476 euros.
The euro stood lower against the greenback at 1.1548 dollars from 1.1608 dollars.
Against the yen, the dollar was trading higher at 159.31 yen compared to 158.66 yen.
In the UK, a report showed firms expect to raise prices in the coming months but only modestly.
According to the Bank of England’s Decision Maker Panel survey firms expect to increase their prices by 3.5% over the next 12 months, according to data for the three months to March.
This is 0.1 percentage point higher than predicted over the three months to February.
JPMorgan analyst Allan Monks these moves are “small” compared to the jump seen in household inflation expectations.
“Arguably, business expectations matter more now, given the weaker jobs market and the reduced bargaining power of labour,” he added.
Mr Monks thinks the report reduces the pressure on the Bank of England to act quickly, and therefore not have to hike rates in April.
On the FTSE 100, the weak gold price weighed on Fresnillo and Endeavour Mining, down 1.7% and 2.4% respectively.
While on the FTSE 250, Hochschild Mining fell 3.4%.
Gold traded at 4,663.40 dollars an ounce on Thursday, down from 4,781.92 dollars at the same time on Wednesday.
SSE rose 1.9% after raising the bottom end of annual earnings guidance to reflect continued strong operational performance.
The Perth, Scotland-based electricity generator now expects adjusted earnings per share of 147p to 152p in the financial year ending March.
This compares to guidance of 144p to 152p per share provided in February, and 160.9p per share in the financial year prior.
RBC Capital Markets said Bloomberg consensus for adjusted EPS for the financial year to March is 148.4p per share.
The biggest risers on the FTSE 100 were 3i Group, up 103.0p at 2,687.0p, Centrica, up 6.5p at 218.5p, Shell, up 100.0p at 3,543.5p, Tesco, up 13.5p at 487.0p and Rentokil Initial, up 12.7p at 488.3p.
The biggest fallers on the FTSE 100 were Endeavour Mining, down 114.0p at 4,606.0p, St James’s Place, down 25.0p at 1,211.0p, Kingfisher, down 5.8p at 282.9p, Howden Joinery, down 15.0p at 799.0p and Experian, down 47.0p at 2,592.0p.
Tuesday’s global economic calendar has a slew of composite PMI readings including the UK at 9.30am BST.
In the US, durable goods orders data is due and a consumer inflation expectations report.
Tuesday’s domestic corporate calendar has full year results from JTC PLC.
Financial markets in the UK are closed on Friday and Monday for Good Friday and Easter Monday.
– Contributed by Alliance News
