London’s FTSE 100 edged lower on Monday as escalating tensions between the United States and Iran raised concerns over shipping through the Strait of Hormuz.
Investors also turned their attention to Britain’s political transition as Andy Burnham prepared to take office as the country’s new prime minister.
The blue-chip FTSE 100 index fell 0.5% to 10,543.91 points by 1052 GMT.
The midcap FTSE 250 slipped 0.1%.
Market sentiment remained under pressure as US strikes on Iran entered a ninth consecutive day.
Concerns over the security of shipping through the Strait of Hormuz increased following reports that tankers had been immobilised.
Brent crude prices climbed above $90 a barrel for the first time in a month, adding to worries about inflation and economic growth.
Energy-sensitive sectors come under pressure
Higher oil prices weighed on sectors that are particularly sensitive to energy costs.
The automobiles sector fell 1%, while the travel and leisure sector declined 0.7%.
Investors were concerned that rising fuel prices could increase operating costs for businesses while also reducing consumer spending.
The renewed rise in oil prices added to fears that inflation could remain elevated, potentially influencing future interest-rate expectations.
Investors assess the UK’s political transition
Market participants also monitored developments in British politics as Andy Burnham was set to become the country’s seventh prime minister in a decade, succeeding Keir Starmer.
Burnham has pledged to address rising living costs and improve struggling public services.
Investors were closely watching the transition for potential policy signals, particularly regarding fiscal priorities and government spending.
British government bond yields moved slightly higher as investors assessed what a new Labour government could mean for fiscal policy and public spending.
The political transition added another layer of uncertainty for markets already focused on geopolitical developments and inflation risks.
Technology stocks outperform
Despite the broader market weakness, technology shares provided some support.
The technology sector rose 0.5%, leading gains among major sectors as investors looked ahead to earnings from major US technology companies.
The upcoming results are expected to offer another test of the artificial intelligence-driven rally that has supported global technology stocks.
Ryanair and Big Yellow shares decline
Among individual stocks, Ryanair was one of the biggest fallers.
The budget airline’s shares dropped 7.2% after the company reported a one-third decline in first-quarter profit.
Ryanair also warned that summer ticket prices could face pressure due to uncertainty surrounding the Iran conflict and the broader economic environment.
Meanwhile, shares of self-storage company Big Yellow fell 2% after the firm reported a decline in first-quarter occupancy rates.
The combination of rising geopolitical tensions, higher oil prices, and political developments in Britain kept investors cautious, leading to modest declines across London’s equity markets.
