FTSE 100 slips as oil tops $100 amid Hormuz stalemate; BAT rises on upgrade, Mondi drops
London shares fell at the open on Friday as a tense stand-off between the US and Iran in the Strait of Hormuz pushed oil past $100 a barrel, unsettling risk sentiment. The FTSE 100 dropped 36.80 points, or 0.4%, to 10,420.21. The FTSE 250 was down 0.6% at 22,629.29 and the AIM All-Share slipped 0.6% to 797.30.
The Cboe UK 100 declined 0.6% to 1,036.74, the Cboe UK 250 fell 0.7% to 19,688.76, and the Cboe Small Companies eased 0.2% to 18,181.22. Losses were mirrored on the continent, with the CAC 40 in Paris 0.8% lower and Frankfurt’s DAX 40 down 0.1%. Sterling softened to $1.3474 from $1.3500 at Thursday’s London close and to €1.1528 from €1.1551.
The euro eased to $1.1691 from $1.1708, while the dollar firmed to ¥159.68 from ¥159.50. Brent crude extended gains to $106.28 a barrel on Friday morning from $103.25 on Thursday.
Geopolitical nerves stayed taut after US President Donald Trump said the US would destroy any vessel laying mines in the Strait of Hormuz, while ruling out a nuclear strike, saying such weapons “should never be allowed to be used by anybody.” Swissquote analyst Ipek Ozkardeskaya said Iran appeared unwilling to return to talks, and added that developed market yields are rising alongside oil prices, fueling inflation expectations as equities hesitate near all-time highs.
Trump also announced that Israel and Lebanon extended a ceasefire by three weeks, and he voiced hope for a historic three-way meeting and a potential peace deal. In UK data, the Office for National Statistics reported retail sales volumes rose 0.7% in March, rebounding from a revised 0.6% fall in February and following a revised 1.8% rise in January.
Fuel sales jumped on the month as motorists stocked up amid climbing prices. Excluding automotive fuel, total retail sales rose 0.2% on the month, in line with FXStreet-cited expectations. Sales volumes including automotive fuel were up 1.7% year on year to March 2026.
Overnight moves were mixed in Asia: Tokyo’s Nikkei 225 climbed 1.0%, the Shanghai Composite slipped 0.3%, Hong Kong’s Hang Seng Index was up 0.3, and Sydney’s S&P/ASX 200 edged down 0.1%. On Wall Street Thursday, the Dow Jones Industrial Average fell 0.4%, the S&P 500 lost 0.4% and the Nasdaq Composite dropped 0.9%.
The US 10-year Treasury yield rose to 4.32% from 4.29%, while the 30-year advanced to 4.91% from 4.89%. In London trading, British American Tobacco led blue-chip gainers, up 2.4% after Morgan Stanley raised its rating to overweight from underweight. Packaging group Mondi tumbled 6.1% after it reported a sharp drop in first-quarter profitability, citing lower prices and mounting costs stemming from the Middle East conflict.
Underlying EBITDA, including forestry fair value, fell 27% to €212 million for the quarter to end-March from €290 million a year earlier. Mondi described market conditions as challenging, saying lower average selling prices and higher energy-related input costs toward the end of the quarter offset stronger sales volumes.
With oil above $100 and bond yields edging higher, traders remained cautious as they assessed the durability of the risk rally against a backdrop of geopolitical tension and sticky inflation expectations.