The FTSE 100 opened lower, falling 1% or 114 points to 10,796.49, as escalating tensions in the Middle East triggered a surge in oil prices and weighed heavily on travel-related stocks. Brent crude futures jumped as much as 13% intraday before stabilising near $78-$80 per barrel.
IAG, the parent company of British Airways, fell 7% to £395.3 after dropping as much as 10% earlier in the session.
EasyJet declined 5% to £443.6, reflecting concerns over higher jet fuel costs and disrupted routes.
Travel and hospitality exposure also weighed on InterContinental Hotels Group, which slipped around 5% as investors reassessed demand risks.
Disruptions to airports in Tel Aviv, Doha, Dubai and Abu Dhabi, alongside travel warnings issued by the UK Foreign Office, have heightened uncertainty around international travel demand and operational costs for carriers and hotel operators.
In contrast, energy and defence stocks rallied strongly as investors rotated into sectors expected to benefit from geopolitical tensions and higher commodity prices.
Shell rose 5.09% to £3,230, while BP climbed 4.55%, advancing £21.75 to £499.4.
Defence contractor BAE Systems surged 7.20% to £2,264 as expectations of increased military spending strengthened sentiment.
Mining stocks also attracted safe-haven flows, with Endeavour Mining rising 4.25% to £5,515 and Fresnillo gaining 2.08% to £4,328.
The strength in oil producers followed tanker disruptions in the Strait of Hormuz, a critical shipping route that carries roughly 20% of global oil supply.
Lloyds Banking Group declined around 3% to £99, reflecting risk-off positioning.
Spirax Group fell 3.29% to £7,645, Diploma dropped 3.17% to £5,495, and Games Workshop slid 2.57% to £17,430.
AstraZeneca edged lower by 1.20% to £15,536, while retailer Next declined 3.85% to £13,000 amid softer consumer sentiment expectations.
Bunzl suffered a hit to profit in fresh annual results amid disruption in North America as a result of Trump’s tariffs.
The firm’s pre-tax profit slumped 8% to £620.5 million, whilst earnings per share tumbled over 5% to £141.5.
However, revenue managed a 3% gain to £11.84 billion, driven by acquisitions. Revenue in Bunzl’s largest market, North America, declined by over 1%.
Despite this, the group increased the total dividend by 0.3% to £74.1 million, with a £200 million share buyback also completed during the year.
Asian markets have posted losses amid tensions in the Middle East, with the Nikkei 225 down 1.3% and the Hang Seng index off 2%.
Wall Street futures are pointing to a decline of about 1%. The flight to safe havens meant the dollar index today rose to its highest level in over a month, with the pound this morning down 0.9% at $1.3359.
On Friday, the Dow Jones Industrial Average fell 1.1%, the Nasdaq Composite dropped 0.9% and the S&P 500 lost 0.4%.
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