- FTSE 100 rises 17 points
- Oil prices up modestly after Iran missile attack on Israel
- JD Sports interim results disappoint
- Challenger bank Starling fined for 'shockingly lax' controls
4.01pm: FTSE makes the best of a bad situation
London's blue-chip share index is standing if not quite head and shoulders above the rest of European market, at least making the best of a bad situation from the fighting in the Middle East.
The FTSE 100 has added 17 points or 0.2% to reach 8,294 so far today, with half an hour to go, thanks to many of the largest companies in the index being oil and mining giants.
Shell and BP both have gained around 2% as oil prices bounced on the heightened tension around Israel, Lebanon and Iran.
HSBC, the third largest company in the index, is being carried higher along with many other businesses with large exposure to China lately, including Standard Chartered and Prudential, following the recent stimulus announcements from Beijing.
Miners, such as Rio Tinto, Anglo American and Glencore, are also up there, rising between 1.2% and 1.8%.
Contractor BAE Systems is up 1.75%, along with other European defence groups in other markets.
The mid-cap FTSE 250 index, although its leaderboard was dominated by the likes of Fidelity China Special Situations and Schroder AsiaPacific Fund, and includes several oil and defence companies, does not have the same weighting, and has dropped 133 points or 0.6% to 20,781.6.
US stocks started lower but have crept very modestly higher, after an encouraging ADP jobs report, with the S&P 500 and Nasdaq both up less than 0.1%.
"Global markets, and indeed the international community, are on tenterhooks as they await an Israeli response to Iran’s attacks yesterday," said market analyst Chris Beauchamp at IG.
"This is unlikely to be a repeat of last time, given the geopolitical implications, and thus today’s calm reaction by investors may not last."
Others in the City feel the financial impact from the Middle East is likely to remain limited, though that assumes the situation does not does not broaden to include countries further afield.
He said developments in the Middle East have the potential to trump the key US jobs payrolls report at the end of the week, though the stronger ADP figure helped to steady skittish nerves.
"Expectations of another bumper cut have been reined in for now, a development that investors appear to have taken in their stride for now," he said.
3.34pm: Oil analysis
It is "all about Middle East conflict now when it comes to oil prices", says market analyst Fawad Razaqzada at City Index.
"The extent of Israel's potential response to Iran will influence how much further geopolitical risk markets are likely to factor in."
Crude oil has risen 3.2% today to almost $76 and he says it "could rise another $5 in the next few days if we see further escalation in the conflict".
That said, if there are no actual disruptions in supply, ongoing demand concerns expectations that OPEC will slowly return withheld supplies back into the market should keep a lid on oil prices.
Although Israel has vowed to retaliate, Razaqzada said oil prices could still fall, if Israel’s retaliation is "a measured one, like last time", and avoids strikes on Iran’s nuclear facilities.
"This potential response may be interpreted by traders as both nations opting to de-escalate tensions.
"However, if Israel lures in the US in its fight, or responds with an even bigger attack this time, then watch out for oil prices to potentially sky-rocket."
2.43pm: Wall Street opens in the red
US stocks have started lower, moving in step with most markets in Europe.
The S&P 500 and Nasdaq have both fallen 0.5% at the open, with the Dow Jones opening down 0.35%.
Back in London, the FTSE 100 is up 10 points or 0.1%, while the mid-cap FTSE 250 has tumbled 154 points or 0.7%.
Across the Channel, the CAC-40 is flat in Paris, while the benchmarks of Frankfurt, Madrid and Milan are all down 0.5% or more.
2.27pm: Talks begin on UK-EU co-operation deal
The UK and European Union reportedly moved closer to a post-Brexit 'reset', as Kier Starmer travels to Brussels as prime minister for the first time today.
European Commission president Ursula von der Leyen began a first round of bilateral talks aiming to improve relations between the two sides.
The PM said he believes the British public "wants a return to pragmatic, sensible leadership" with our closest neighbours.
Brussels is said to be prioritising a scheme to would allow students and other young people from the EU to live and work in the UK for a fixed period, and those from the UK to do the same across the EU.
EU officials told media reaching such an initial agreement would be a “token of good faith” towards repairing the relationship.
"In these very uncertain times, like-minded partners like us must co-operate more closely," von der Leyen said.
2.10pm: Tesla deliveries miss
Tesla Inc (NASDAQ:TSLA) deliveries are out, ahead of the Wall Street opening bell.
Third quarter deliveries came in at 462,890 vehicles, up from 443,956 in the second but below the consensus forecast of 463,897.
Production rose to 469,796 vehicles for Q3 from 410,831, which was ahead of the average estimate of 465,828.
Model 3/Y deliveries were ahead of expectations at 439,975.
Tesla stock is down 3.3% premarket at $249.40.
1.23pm: US private sector jobs stronger than expected
US private sector jobs data has come in much stronger than expected, with an ADP employment change reading of 143k for September, up from 99k before and against 125k expected.
The data "rolled in like a breath of fresh air for the Fed," says market analyst Naeem Aslam at Zaye Capital.
"This news has certainly put a damper on hopes for a ballistic shift in monetary policy. As a result, gold prices have taken a hit, with the dollar index flexing its muscles."
"All eyes are now on Friday’s developments," he says, referring to the much more closely followed official jobs report, or the non-farm payrolls or NFPs as they are known in the trade.
"In the world of markets and risk, good news is still good news - but when it comes to volatility, the scene is rather tame, lacking the drama traders crave," says Aslam.
12.42pm: US stocks tipped to dip
US stocks are expected to slip lower when Wall Street opens, joining most European markets in the red.
Dow Jones futures are down 0.3%, while those for the S&P 500 are down 0.2% and for the Nasdaq 100 they are 0.1% lower.
In Europe, only the FTSE 100 is in positive territory, though only up 0.1% since the open.
Germany's DAX is down 0.6%, while Spain's IBEX and Italy's FTSE MIB are both 0.5% lower. France's CAC-40 is flat.
12.02am: Inflation back in focus as oil prices rebound
Inflation is in focus as the oil price rebound, though it remains still well off the levels seen six months ago.
Oil prices are continuing to rise as we move into the afternoon, with Brent crude up 3.2% to $75.98, levels last seen in early September.
This follows traders calculating what the fall-out will be from the missile attack by Iran on Israel last night.
Matthew Ryan, strategist at Ebury, says moves in various asset prices reflects "a bout of risk aversion", with many equity markets lower and safe-haven currencies outperforming, including the US dollar.
"The wider implication for markets is the rising possibility of a sharp move higher in global oil futures, and another period of elevated energy prices and consumer inflation.
"The ramifications will not, however, be anywhere near as severe as following the Ukraine invasion, and so far, at least, the moves in markets have been relatively contained," Ryan says.
Trevor Greetham, head of multi-asset at Royal London Asset Management, says: "The main message from geopolitics is inflation hasn’t gone away."
Bond markets reactions include Germany’s 10-year bond yield rising 5.5 basis points, having yesterday hit its lowest level since January.
The UK’s 10-year gilt yield was up 8bps today to 4.02pc.
Massimiliano Maxia, fixed income specialist at Allianz Global Investors, said: “Markets are taking a breather after yesterday’s bond rally. However, geopolitics and the central bank’s policy paths remained in focus.”
11.38am: Oil and defence companies support London and Paris benchmarks
The FTSE 100 is battling higher again, up 16 points to 8,293, but over two thirds of Footsie companies are in the red now as the risk-off mood imposes itself amid continued fighting and threats in the Middle East.
Hezbollah media chief Mohammad Afif told media "we are only in the first round" following clashes with Israeli troops.
He says the Lebanese group has enough fighters, weapons and ammunition to push back Israel.
"We assure you, the enemy, that this is only the first round,” Afif told reporters in southern Lebanon, including Al Jazeera.
He said the group is ready to "sacrifice our blood and soul for our homeland by the grace of God” and that what happened in Lebanese towns Maroun al-Ras and Odaisseh "are nothing but the tip of the iceberg".
Afif said Israel’s air superiority will "turn into losses on the ground".
The FTSE is being lifted by gains for oil, defence and mining companies, plus China-tilted banks.
Top of the leaderboard are Prudential PLC (LSE:PRU), BP PLC (LSE:BP.), Shell PLC (LSE:SHEL, NYSE:SHEL), BAE Systems PLC (LSE:BA.), HSBC Holdings PLC (LSE:HSBA) and Standard Chartered PLC (LSE:STAN).
Miners are not far behind.
In Europe, Frankfurt's DAX is down, but in Paris the CAC-40 is flat, with defence giant Thales and oiler TotalEnergies (NYSE:TOT, EPA:TTE) doing the heavy lifting.
11.16am: FTSE in the red
The FTSE 100 has now slid into the red, down just over six points at 8,270.
JD Sports continues to be the biggest loser, down 4.6%, with utility companies among the other prominent fallers, including water companies Severn Trent and United Utilities both down around 3%, Vodafone and SSE both down over 2%.
Housebuilders, airlines, banks and retailers are also generally down between 1.5% and 2.5%, including Vistry Group, Persimmon, easyJet, NatWest, Kingfisher and Next.
10.33am: Starling 'shockingly bad' crime controls
The City watchdog has fined challenger Starling Bank almost £29 million for its "shockingly lax" financial sanction screening controls.
Acknowledging that Starling rapidly grew from approximately 43,000 customers in 2017 to 3.6 million in 2023, the Financial Conduct Authority (FCA) said "measures to tackle financial crime did not keep pace with its growth".
The digital bank's lax controls to screen for financial sanctions, says Therese Chambers, an FCA enforcement director, "left the financial system wide open to criminals and those subject to sanctions. It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime."
10.22am: Oil prices creep higher
Brent crude oil prices have risen further, up 2.5% to $75.43 a barrel now.
Iran said this morning that last night's attack was now over, barring further provocation, but Israel and the US both promised to hit back.
An Al Jazeera report from Lebanon says Israeli forces entered Lebanese territory this morning but were repelled in ground fighting, adding that a response attack had also been made on Israel.
"Hezbollah also bombed the Shtula settlement, where Israeli forces are staging on the border, and hit a large infantry force in the Misgav Am settlement with missiles and artillery."
Earlier, European equity markets were, says market analyst Joshua Mahony at Scope Markets, "seemingly happy to ignore the growing risk of a major Middle East conflict between Israel and Iran".
He says Brent crude is on track for its best week since February.
"Unsurprisingly, the heavily commodity-focused FTSE 100 has enjoyed the benefits of rising oil prices, with Shell and BP both pushing higher in anticipation of a potential conflict that could impact the production and transit of oil in the region."
10.15am: Markets slip after more missiles fired into Israel
In the past few minutes the FTSE 100 has given up almost all its early gains, with the FTSE 250 also diving further into the red.
The London blue-chip gauge is up just under 11 points at 8,287, having been up over 40 earlier, while the mid-cap index has dropped 77 points.
This follows Hezbollah saying it targeted areas north of Israeli city Haifa with a large missile salvo, while Iran's president said if any further "mistakes" are committed by Israel they will "receive a stronger and more destructive response".
The Iranian leader also warned that if America and European countries "leave the region, wars will end and the countries of the region will be able to live in peace"
There's not been much big economic data apart from European unemployment, which remained at 6.4% as expected.
Elsewhere, Iceland’s central bank unexpectedly cut rates by 25 basis points, container shipping giant Maersk said it continued to serve its customers in Lebanon with two weekly callings in Beirut, and Citibank's economic surprise index for the US continues to drift higher.
9.47am: UBS suggests strategies to reduce the impact of market swings
UBS is another investment bank to state this it believes the Middle East conflict poses risks of market volatility but its 'base case' is to expect is that the conflict stops short of an all-out war between Israel and Iran, and their allies.
"We also assume that energy flows from the Middle East will continue without sustained interruptions.
"Meanwhile, we believe the outlook for equities will be supported by a soft economic landing in the US, combined with Fed rate cuts, strong earnings, and optimism over the commercialization of artificial intelligence.
"At the same, we do think investors should consider strategies to reduce the impact of market swings on their portfolios."
Gold is noted as continuing to have appeal as a hedge against geopolitical risks and potential US political shifts following the election.
Gold should also benefit from further Fed rate cuts, robust central bank demand, and rising investor appetite via exchange traded funds, UBS said, with the Swiss bank expecting gold to reach $2,750 an ounce by the end of the year and $2,900 by the final quarter of 2025, up from just over $2,650 now.
9.34am: Small cap risers and fallers
Looking outside the FTSE 350, musicMagpie PLC (AIM:MMAG) is the biggest mover this morning, up 48% after it agreed to be bought by AO World.
Saga PLC (LSE:SAGA) is up 14% following its confirmation of talks to sublet its insurance arm to Ageas, in a deal that is reported to possibly include a sizeable up-front payment to help trim its debt pile.
Celadon Pharmaceuticals PLC (AIM:CEL) has jumped 12% on the back of saying it has signed a new five-year sales contract with "a newly established healthcare company for the supply of its medicinal cannabis product from its UK facility", with a minimum order of up to £10.5 million.
Among the fallers, One Heritage Group PLC dropped 25% after announcing a major restructuring and strategic pivot, including rebranding to Zentra Group and a shift away from in-house construction and co-living services due to rising costs and market challenges.
Technology Minerals slid 19% after saying a fire broke out at its 48.35% owned battery recycling business, Recyclus Group's LiBatt plant in Wolverhampton. The fire was separate from the recycling plant and was quickly contained, it says, with the plant building unaffected and expected to reopen today
Inspiration Healthcare Group PLC (AIM:IHC) is down 12% after its interim results reflected a challenging period with "encouraging signs of recovery" from its neonatal business, plus a warning that the sales mix in the second half will continue to hit gross margins and therefore full-year earnings expectations.
Wynnstay Group PLC (AIM:WYN) fell 9.4% as the agricultural supplies group warned that "more challenging conditions" had been experienced in seasonally important months, meaning results for the financial year will be materially lower than last year and current market expectations.
Topps Tiles PLC (LSE:TPT) saw 2.2% chipped off its share price as it reported a 5.7% fall in sales, as persistently weak demand in the repair, maintenance and improvement sector set the stage for “very challenging” trading conditions.
9.12am: Barclays downgrades banks, eases up on autos
Barclays has cut its rating on European banks to 'market weight', from 'overweight' as strategists see a tougher landscape for the sector from here.
European banks have benefitted from net interest income generated by high interest rates but now that the ECB is expected to cut rates rapidly over the coming months, this boost to banks’ bottom lines is getting eroded, with weaker EU growth also a factor in the downgrade.
"Shorter term we worry the ECB will need to cut more than expected to stabilise the economy, which could pressure NIMs (net interest margins)," Barclays said.
The equity strategists also closed their 'underweight' position on the auto sector and discretionary stocks due to an improving situation for consumers.
"We close our UW on autos as the recent round of severe profit warnings, and poor performance, means a lot of the bad news is likely in the price now," they said.
9.03am: JD numbers 'solid'
Shares in JD Sports are down 3.1% after reporting first half results.
Analysts at Panmure Liberum felt the numbers were "solid", with flat profits and flat adjusted operating margins, "despite slower like-for-likes and continued investments in its supply chain, people and IT as it corrects past underinvestment".
In trading too, they say it is "worth acknowledging" the 3.3% LfL growth in North America despite its biggest brand partner Nike reporting double digit declines.
While guidance range for full year adjusted PBT has been maintained, currency headwinds are greater than previously expected at £25 million versus £15 million previously, which implies a 1% cut to underlying consensus expectations.
8.44am: 'Little impact' unless Middle East conflict widens
The financial market impact of the Iranian missile attack on Israel should "remain limited", JP Morgan said, as long as it does not broaden to include countries like Saudi Arabia or UAE directly, other countries outside the region, nor blocks the Straits of Hormuz.
Iran's missiles plus the incursion of Israeli troops into Lebanon "indicate to us a greater risk of a wider regional conflict than any point we have seen since the 7 October attacks by Hamas", strategists at the investment bank say in a note written last night.
"MENA stock markets, oil and more generally global equities have been little impacted by the growing conflict in Israel and its neighbors, even the April missile attacks by Iran on Israel had little lasting market impact."
Looking at data from the previous spikes in geopolitical risk around the 7 October attacks and the 14 April bombing of Israel by Iran, the JP Morgan team noted a small impact each time.
8.31am: Wizz and easyJet down, China funds up
Wizz Air Holdings PLC (AIM:WIZZ) shares are flying lower after the airline reported emptier planes over the course of September, while its shares have also been hit by wider concerns about the impact of the Middle East fighting and other geopolitical tensions.
Passenger numbers ticked up 3.9% to 5.76 million during the month, but load factors fell by 0.7% to 91.7% as flights were more empty.
The shares are down 1.85%, while easyJet PLC is also down 1.2%.
Overall, the FTSE 250 index is slightly in the red, down 17 points to just below 20,900, a fall of less than 0.1%.
Risers among the mid caps are led by Fidelity China Special Situations PLC, one of several China-aimed stocks on the front foot as they extend gains from the past week. Schroder Oriental Income Fund Ltd and Schroder AsiaPacific Fund PLC are also near the top of the 250 leaderboard.
The FTSE 100 is maintaining its early level, up 30 points at 8,307, a gain of 0.4%.
In Europe, the DAX is just above flat, while the CAC 40 has added 0.2% in early trading in Paris, while in Madrid the IBEX 35 is 0.1% lower.
8.11am: FTSE 100 opens higher
The FTSE 100 has opened higher as it rolls with the punches of Middle Eastern geopolitics, rising 31 points to 8,308 in the opening minutes of trading.
Oil titans BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) are topping the early leaderboard, up either side of 2%, with defence group BAE Systems PLC (LSE:BA.) not far behind at 1.9%.
Mining giants including Rio Tinto PLC, Anglo American PLC (LSE:AAL) and Glencore PLC (LSE:GLEN) are also among the top risers, along with Asia-focused financial names like Prudential PLC (LSE:PRU) and HSBC Holdings PLC (LSE:HSBA).
JD Sports Fashion PLC (LSE:JD.) is down over 3% after its half-year update disappointed.
7.58am: AO World moves into circular economy
AO World PLC (LSE:AO.) has agreed a £10 million cash takeover of AIM-listed musicMagpie PLC (AIM:MMAG), which and resells second hand CDs, games and electronics.
The offer is priced at 9.07p per share, representing a premium of 58% to yesterday's closing price of 5.75p, which has been the average level for the past month.
Directors of musicMagpie, with advice from Shore Capital, consider the terms fair and reasonable and said they intend to unanimously recommend the deal to shareholders.
7.48am: JD Sports tweaks guidance
In its interim results, JD Sports Fashion PLC (LSE:JD.) has tweaked guidance for the full year, warning that a stronger pound is impacting its bottom line.
The group said foreign exchange rate headwinds made a £6 million dent in profits in the first half and are predicted to leave a £20 million mark in the second.
This will be mostly counterbalanced by a £25 million contribution to earnings from Hibbett, the US chain it bought for $1 billion earlier this year.
JD is expected to deliver pre-tax profits of £955 million to £1.035 billion for the current year after posting £405.6 million in the first half on sales of just over £5 billion...read more.
7.31am: Saga in talks with Ageas
Saga PLC (LSE:SAGA) has put out a statement noting recent media coverage and said it is in talks with Belgian insurance giant Ageas.
But this is only in regard to "a potential partnership arrangement" for its insurance business.
Ageas was most recently in UK investors's attention after it approached Direct Line but eventually said it will not make a takeover offer.
Saga said there is "no certainty" of a partnership agreement being struck and it will keep the market updated on developments.
7.26am: Middle East tensions' impact on financial markets
Mounting tensions of the Middle East "sent a wave of worry across the global markets", says market analyst Ipek Ozkardeskaya at Swissquote Bank.
As well as oil, safe haven assets including US treasuries, gold and the US dollar gained as well.
Gold remains near its all-time highs but has dropped back slightly overnight, while the US 10-year yield tested 3.70% to the downside.
The dollar index jumped, while the VIX volatility or 'fear index' spiked past 20.
Technology and cryptocurrencies were the most hard hit, with Ozkardeskaya saying "there is no direct reason for that, besides the sharp decline in risk appetite".
Looking back, she notes that it has been almost a year since the war in Gaza began, with the first months of the war pushing oil prices higher but the conflict has had "little sustainable impact" on oil beyond April, when traders started giving more weight to the slowing Chinese and world economy than the supply disruptions.
"But if Iran – which produces around 3 million barrels per day – gets seriously involved in the conflict, we could see the price of a barrel remain under positive pressure for a prolonged period.
"This being said, the geopolitical tensions have a limited impact in the medium to long run price trends, and the gains on the back of tensions should be given back with de-escalation and/or as the market gets used to the headlines and divert focus to something else."
7.15am: FTSE 100 seen extending gains
The FTSE 100 is predicted to extend its gains on Wednesday as financial markets continue to react to fighting in the Middle East.
Futures are pointing to a gain of around 12 points, adding to the almost 40 points gained yesterday to take the London benchmark to 8,276.65.
The FTSE's unique collection of oil, mining and defence giants led to it being the only major stock market gauge to climb higher in Europe and the US after news broke of Iran's planned missile attack, which was launched shortly after markets closed in London.
A reported 180 ballistic missiles were fired, with Israel saying it will retaliate.
Oil prices are slightly elevated, with Brent crude up 1.5% at $74.7 per barrel, as fighting continues around Israel, Lebanon and Gaza.
US stocks ended lower, led by the tech-strewn Nasdaq, which fell 1.5%, with the S&P 500 down 0.9% and the Dow Jones dropping 0.4%.
In Asia, the Nikkei is leading the declines at -1.85%, followed by Korea's KOSPI at -0.66%, while the Hang Seng is up 6% as China optimism continues to percolate after a public holiday on Tuesday.
Markets in mainland China are closed for the Golden Week holiday and will remain shut until the 8th.
Today in London, the City diary includes results from JD Sports Fashion PLC (LSE:JD.), which follow numbers from Nike overnight that saw its shares fall.