UK equities traded slightly higher on Friday as rising oil prices continued to support energy stocks, while new data from Lloyds highlighted renewed pressure on mortgage borrowers following the latest escalation in Middle East tensions.
By 03:30 ET (07:30 GMT), the FTSE 100 was up 0.22%. Across Europe, Germany’s DAX gained 0.33% and France’s CAC 40 advanced 0.26%. Sterling weakened slightly against the US dollar, with GBP/USD falling 0.07% to 1.3449.
Hormuz Disruptions Keep Energy Markets on Alert
Investors remained focused on developments in the Strait of Hormuz after shipping activity declined sharply. Reuters, citing Kpler data, reported that only 33 vessels passed through the waterway between Monday and Thursday, compared with 50 during the same period a week earlier.
Only six crude oil tankers departed the strait during the week, while traffic through the Bab al-Mandeb route increased to 26 vessels on Thursday, suggesting that some shipping activity is being redirected.
The disruption followed explosions near Iran’s Qeshm Island on Thursday evening, which the semi-official Fars news agency linked to reported military strikes. Brent crude surged nearly 4% in the previous session and continued rising on Friday.
Middle East Tensions Continue to Shape Market Sentiment
Political developments remained uncertain. Iranian Parliament Speaker Mohammad Bagher Ghalibaf criticised the United States in a post on X, stating that “using bullying + broken promises + fake news as leverage is a failed strategy” and describing Washington’s approach as “theater diplomacy.”
Mohit Kumar, an analyst at Jefferies, said investors may become “desensitized to the Middle East” as long as oil prices remain around or below $80 per barrel, noting that broader market conditions remain supported by a resilient US labour market and strong global liquidity.
However, Kumar identified higher US government bond yields as the main risk, calling 10-year Treasury yields near 4.70% the “biggest worry.” He warned that oil prices between $75 and $80 remain around 25% to 30% above pre-conflict levels, which could continue to contribute to global inflation pressures.
Kumar also suggested that a possible agreement between Iran and Oman regarding shipping through the Strait of Hormuz may not satisfy Washington, as it could give Tehran greater influence over the strategic waterway. Referring to reports that Iran wants restrictions placed on US and Israeli vessels, he said that “we are still some distance from a deal.”
Reuters separately reported that reopening the Strait of Hormuz may require concessions from Washington, as the US opposes any arrangement that gives Iran control over the route or allows it to impose transit fees, while Tehran continues to seek influence over shipping activity.
Meanwhile, US President Donald Trump acknowledged that some American weapons stockpiles were “a little bit tighter” than others, while rejecting reports that the five-month conflict had significantly reduced US military supplies. His comments followed reports, denied by the White House, that he had questioned Defence Secretary Pete Hegseth over ammunition levels.
Lloyds Reports Slower UK House Price Growth
In the UK housing market, Lloyds’ latest House Price Index showed that property prices were unchanged in July after rising 0.2% in June.
The average UK home was valued at £299,253, while annual house price growth slowed to just 0.1%, the weakest pace since November 2023.
“The UK housing market remained steady in July, with the average property price effectively unchanged over the month,” said Amanda Bryden, Head of Mortgages at Lloyds.
She added that mortgage rates had “edged higher again after easing earlier in the summer” following renewed concerns linked to Middle East tensions.
Oil and Gold Continue Rising
Oil prices extended their gains, with Brent crude rising 0.70% to $83.08 per barrel and US West Texas Intermediate (WTI) increasing 0.36% to $77.57.
Safe-haven demand also supported precious metals. Gold futures climbed 1.04% to $4,345.47 per ounce, while spot gold gained 1.1% to $4,286.50.
UK Corporate Updates
- JD Sports (LSE: JD.) appointed former IKEA chief executive Peter Agnefjäll as its new chair, with the appointment taking effect on 1 September.
- Goodwin (LSE: GDWN) is reportedly considering the sale of its defence business following order delays, according to the Financial Times.
