Early market roundup: European stocks down amid new US strikes on Iran

Stock prices in London were lower on Thursday morning, after the US launched fresh strikes against Iran, as shares of miners fell alongside the price of gold.

The FTSE 100 index opened down 93.46 points, 0.9%, at 10,411.55. The FTSE 250 was down 78.33 points, 0.3%, at 23,306.07, and the AIM all-share was down 2.15 points, 0.3%, at 811.44.

The Cboe UK 100 was down 1.0% at 1,034.31, the Cboe UK 250 was down 0.6% at 20,158.62, and the Cboe small companies was down 0.2% at 18,792.71.

In European equities on Thursday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was 0.2% lower.

Sterling was at $1.3404 on Thursday morning, down from $1.3429 at the London equities close on Wednesday. Against the euro, sterling eased slightly to €1.1537 from €1.1543.

The euro was lower at $1.1612 from $1.1633. Against the yen, the dollar was marginally higher at JP¥159.50 versus JP¥159.46.

Investors were focused on the latest developments in the Middle East, after the US struck southern Iran, drawing retaliation from Tehran.

The fighting, which is the most serious since the ceasefire began in April, drew in US ally Kuwait. It threatened to jettison a fragile diplomatic push to forge a peace agreement and open the Strait of Hormuz, which has become a key point of contention in efforts to formally end the war.

Brent crude for July delivery was trading slightly higher at $96.70 a barrel on Thursday morning from $96.61 on Wednesday.

The fresh fighting appeared to begin when Iranian forces fired at four ships attempting to cross the Strait, state broadcaster IRIB reported on Thursday.

US forces launched strikes that hit a ground control station in the southern port area of Bandar Abbas, a US official, speaking on condition of anonymity told AFP, prompting swift response by Iran.

‘Following this morning’s aggression by the invading US military against a location on the outskirts of Bandar Abbas Airport using aerial projectiles, the American air base that served as the source of the attack was targeted at 0120 GMT,’ the Guards said, according to Iranian state broadcaster IRIB.

The Guards did not provide details on the location of the base, though Kuwait’s military said its air defences were responding to an ‘enemy’ attack on Thursday.

In response, shares in defence firms were higher. Babcock International led the FTSE 100 and rose 1.7%, while BAE Systems climbed 1.5% and Melrose Industries rose 1.2%.

Miners fell as precious metal prices reduced, with Fresnillo 3.5% lower and Endeavour Mining down 3.4%.

Gold was lower at $4,385.19 an ounce early on Thursday from $4,439.66 late Wednesday.

In Asia on Thursday, the Nikkei 225 in Tokyo was down 0.5%. In China, the Shanghai Composite was 0.1% higher, while the Hang Seng Index in Hong Kong fell 1.4%. The S&P/ASX 200 in Sydney retreated 1.4%.

In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.4%, the S&P 500 rose marginally while the Nasdaq Composite gained 0.1%.

The yield on the US 10-year Treasury was quoted at 4.50% on Thursday, widened from 4.47% on Wednesday. The yield on the US 30-year Treasury grew to 5.03% from 5.00%.

Back in London, shares in SSE were down 0.1%, as it said its full-year financial results are towards the upper end of guidance, reflecting ‘strong operational performance’.

The Perth, Scotland-based electricity generator said pretax profit fell 0.7% to £1.84 billion in the 12 months to the end of March from £1.85 billion a year earlier. Adjusted pretax profit sank 5.6% to £2.02 billion from £2.14 billion.

Revenue climbed 0.5% to £10.19 billion from GPB10.13 billion. The company recommended a final dividend of 47.3 pence per share, resulting in a full-year dividend of 68.7p, up 7.0% from 64.2p a year ago.

‘This year has demonstrated the strength and resilience of SSE’s integrated model. We met all our financial and operational targets and delivery of our fully-funded £33 billion investment plan to 2030 - focusing on Networks, Renewables and Flexibility - is well under way,’ said Chief Executive Martin Pibworth.

SSE said its ‘resilient business mix’ means there is no immediate impact from macro volatility on its performance outlook, as it reiterated adjusted earnings per share expectations for financial 2027 and financial 2030.

On the FTSE 250 index, shares in PPHE Hotel Group jumped 27% after Fattal Hotel confirmed a £930 million takeover offer for the company.

Late on Wednesday, PPHE Hotel said it has received a £22 per share acquisition offer from Tel Aviv-based Fattal. The announcement came after the Guernsey-registered operator of Park Plaza and art’otel hotels launched a strategic review and formal sale process in November, appointing Rothschild & Co as financial advisor.

PPHE said the offer from Tel Aviv-based Fattal represents a fair value.

On Thursday, Fattal said it is willing to maintain the proposal to allow for ‘constructive engagement’ with the PPHE board, with a view towards announcing a firm offer within the next four weeks.

Shares in Johnson Matthey were 1.9% lower after it agreed to buy Cormetech, a North Carolina, US-based manufacturer of selective catalytic reduction catalysts, for an enterprise value of $360 million.

Johnson Matthey said pretax profit from continuing operations fell 77% to £91 million in the 12 months to the end of March from £403 million a year prior. Revenue increased 14% to £12.57 billion from £11.02 billion.

In the previous year, Johnson Matthey made a £482 million profit on disposal of businesses, compared to £5 million in financial 2026.

It said its financial 2026 operating profit is in line with previously upgraded guidance. Operating profit from continuing operations fell 65% to £161 million from £454 million on a reported basis. However, underlying operating profit rose 14% to £340 million from £299 million.

For financial 2027, it expects low-to-mid single digit percentage growth in underlying operating profit at constant precious metal prices and constant currency, excluding Catalyst Technologies and Cormetech.

Still to come on Thursday’s economic calendar is eurozone consumer confidence data plus US GDP and personal consumption expenditures figures.

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