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The FTSE 100 opened 15 points lower at 10,180 as tensions escalate in the US-Iran conflict, weighing on investor sentiment, with fresh drone strikes on a UAE nuclear facility and US President Trump’s stark warning that "the clock is ticking" for Tehran having raised fears of prolonged disruption to energy supplies.
Whitbread surged 2.48% to £2,359, while British American Tobacco advanced 1.75% to £4,949 and Imperial Brands gained 1.46% to £2,858.
Among others, RELX rose 1.40% to £2,457, while IG Group Holdings added 1.37% to £1,554 and Tesco edged higher by 1.16% to £454.
On the downside, 3i Group plunged 4.30% to £2,115, while Anglo American declined 2.40% to £3,741 and Berkeley Group slipped 1.48% to £3,196.
Also, Rio Tinto fell 1.44% to £7,654, while Coca-Cola Europacific Partners eased 0.89% to £6,665 and AstraZeneca edged lower by 0.68% to £13,540.
The UK’s cost of borrowing has hit another high to kick off the week following Friday’s tensions.
The yield on 10-year gilts was up to 5.19% on market open, which is over the 18-year high hit last Friday. “For the UK, the bond market backdrop remains awkward,” says Patrick Munnelly, partner at Tickmill Group.
He adds: “Breeden’s comments in the FT that a 'steady hand' on rates is preferable to being “trigger happy” carry a dovish slant and may help anchor front-end pricing. But that does little to solve the bigger issue in long-end gilts, where investors are already demanding a premium for inflation risk, political instability, and fiscal uncertainty.”
Rachel Reeves could scrap plans to increase fuel duty, following pressure over the impact of the Iran war on fuel prices.
Fuel duty was first frozen by the Tories in March 2022, and the Chancellor had extended this hold on the rate until the end of August this year but had refused to say whether she would push it further.
As the Strait of Hormuz remains closed, petrol prices have grown from £132.9 to £158.2 per litre since the war broke out, while diesel prices jumped from £142.4 per litre before the conflict to £186.8 last week.
According to the Sun, the Chancellor is expected to announce theextended freeze on Thursday this week.
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Anglo American found a new buyer for its Australian coking coal business in a deal worth $3.875 billion (£2.9 billion) in cash as the miner continues to simplify its portfolio ahead of its planned merger with Canada's Teck.
The miner had previously struck a deal to sell these coal assets to Peabody Energy in 2024, but the US company walked away after an explosion at one of the mines.
Today, it said the sale to privately held UK company Dhilmar Ltd includes an upfront cash payment of $2.3 billion on completion and a price-linked earnout worth up to $1.575 billion over five years.
The US futures are also in the red, just like the Asian markets this morning, with Hong Kong's Hang Seng down 1.5% and the Shanghai Composite down 0.4%, while Japan's Nikkei has dropped 0.9%.
In India, the Nifty 50 declined 0.09%, and the Sensex fell 0.02% at press time.
