Key facts
- Iran has closed the Strait of Hormuz, citing violations of a ceasefire with Israel.
- Donald Trump threatened to "take over" Iran if the Strait of Hormuz closure persists.
- US Vice President JD Vance is in Switzerland for nuclear program and peace talks with Iran.
- The FTSE 100 index opened broadly flat amid geopolitical and domestic political uncertainty.
- Babcock's pre-tax profit fell to £283.7m due to costs on a warship contract.
- Oil prices edged lower despite the tensions, with Brent crude falling to just under $79.
The FTSE 100 is poised for a flat opening as investors grapple with escalating geopolitical tensions and potential domestic political upheaval. Over the weekend, Iran announced the closure of the Strait of Hormuz, a critical global oil chokepoint, citing violations of a recent ceasefire agreement with Israel. This move has drawn a strong reaction from Donald Trump, who stated that Iran "won't have a country" if the waterway remains shut and suggested the US would "take over the rest of the country."
In parallel, US Vice President JD Vance has commenced negotiations in Switzerland with Iranian representatives concerning Iran's nuclear program and the establishment of long-term peace, following a deal signed on Friday. These talks are anticipated to continue throughout the week.
Domestically, the London Stock Exchange faces uncertainty with reports suggesting that UK Prime Minister Sir Keir Starmer may resign today, following mounting pressure since recent local elections. The return of Andy Burnham as an MP is expected to further intensify this pressure.
In early trading, Airtel Africa plc and Prudential plc showed gains on the FTSE 100, while HSBC Holdings plc experienced a decline. On the FTSE 250, Saga plc rose, and Moonpig Group Plc fell. The AIM 100 saw Beeks Financial Cloud Group Plc gain and Griffin Mining fall.
Defence giant Babcock reported a pre-tax profit slide to £283.7m from £329.1m, impacted by a £140m cost related to its Type 31 frigate contract. Despite this, revenue climbed to £5.1bn, and the company announced a final dividend increase and a £200m share buyback program.
Ocado confirmed that its board is seeking a successor for founder and CEO Tim Steiner, as the company attempts to reverse a significant decline in its share price. The e-commerce and warehouse automation firm's stock has fallen by over 90% from its 2021 peak.
Meanwhile, 55 vessels transited the Strait of Hormuz on Saturday, the highest number since Iran effectively closed the route in February, though still below pre-war averages. Oil prices saw a slight decrease, with Brent crude falling to just under $79 per barrel, despite the heightened tensions.
Private equity firm Castlelake is urging Easyjet investors to accept its third takeover offer of 625p per share, which the budget airline has rejected.