13th Jun 2025 17:06
(Alliance News) - The oil price soared and stocks slumped on Friday after Israel launched dozens of air strikes against Iran, ramping up tensions in the Middle East.
The FTSE 100 index closed down 34.29 points, 0.4%, at 8,850.63. The FTSE 250 ended 237.33 points lower, 1.1%, at 21,149.36, and the AIM All-Share lost 4.45 points, 0.6%, at 761.43.
For the week, the FTSE 100 rose 0.1%, the FTSE 250 was down slightly and the AIM All-Share rose 0.7%.
The Cboe UK 100 was down 0.5% at 881.03, the Cboe UK 250 was down 1.1% at 18,657.34, but the Cboe Small Companies was up 0.2% at 17,083.36.
Following Israel's air strikes against nuclear facilities in Iran, Brent oil jumped to USD73.61 a barrel late on Friday from USD69.66 on Thursday.
The IDF said the attack was in response to the Iranian regime's ongoing aggression against Israel. Dozens of jets struck military targets in various locations of Iran in a first stage, the IDF said. Iran vowed a "strong response".
Iran's supreme leader Ayatollah Ali Khamenei warned Israel that it faced a "bitter and painful" fate over the attacks, while Foreign Minister Abbas Araghchi described the attack as a "declaration of war" and President Masoud Pezeshkian said Iran "will make the enemy regret its foolish act".
US President Donald Trump also raised the temperature, by warning that the next "already planned attacks" on Iran would be "even more brutal".
Writing on his Truth Social platform on Friday, Trump said: "Iran must make a deal [on its nuclear programme], before there is nothing left".
JPMorgan's Natasha Kaneva said the attack pushes the region into a "new conflict with uncertain consequences".
She continued: "While the initial attack avoided energy targets, the Israeli offensive could extend over several days, with Iran vowing to retaliate, potentially having a significant impact on global energy markets."
On the FTSE 100, oil majors BP and Shell ended up 1.5% and 0.6% respectively, while defence company BAE Systems climbed 2.9%.
Leading blue-chip fallers also reflected the oil price spike with airlines such as easyJet, down 2.7%, on the back foot. British Airways owner IAG fell 3.7%. In Frankfurt, Deutsche Lufthansa gave back 3.4%.
The raised tensions provided some respite for the dollar, although sterling remained in demand.
The pound was quoted higher at USD1.3591 at the time of the London equities close on Friday, compared to USD1.3586 on Thursday. The euro stood lower at USD1.1560 against USD1.1575. Against the yen, the dollar was trading at JPY144.01, up compared to JPY143.71.
"The Israeli strike on Iran's nuclear facilities has sent oil prices spiking and has offered the oversold and undervalued dollar a catalyst for a rebound," said ING. "While it's hard to speculate on the situation at the moment, Israel has announced more strikes will follow and Iran's retaliation has already started.
"The risks now point more definitively towards a prolonged period of tension, in contrast to recent episodes. And we think this could continue to take some pressure off the dollar," the broker added.
Another safe haven asset, gold, was quoted higher at USD3,427.50 an ounce against USD3,388.71.
Gold miner Endeavour Mining rose 2.9% while gold and silver miner Fresnillo climbed 2.2%.
In European equities on Friday, the CAC 40 in Paris closed down 1.1%, as did the DAX 40 in Frankfurt.
Stocks in New York were lower. The Dow Jones Industrial Average was down 1.1%, the S&P 500 index was 0.5% lower, and the Nasdaq Composite gave back 0.7%.
The yield on the US 10-year Treasury was quoted at 4.42%, widened from 4.38%. The yield on the US 30-year Treasury was quoted at 4.90%, stretching from 4.87%.
Figures showed US consumer sentiment rose by the most since January 2024 as concerns about the economy eased and short-term inflation expectations showed a marked improvement.
The preliminary June sentiment index rose 8.3 points from a month earlier to 60.5, according to the University of Michigan.
Consumers expect prices to rise at a 5.1% rate over the next year, the data released on Friday showed. That is down from 6.6% in May, the steepest monthly drop since October 2001.
"Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed," Joanne Hsu, director of the survey, said in a statement. "However, consumers still perceive wide-ranging downside risks to the economy."
On the FTSE 250, exploration and production company Energean, which has assets in Israel, was down 5.1%.
Energean received an order from the Israeli Ministry of Energy & Infrastructure calling for the temporary suspension of production and activities of the Energean Power FPSO.
"All production activities have now been temporarily suspended and notices have been issued to Energean's customers and other stakeholders.
"Energean maintains a close dialogue with the Ministry of Energy & Infrastructure and other relevant stakeholders to facilitate the safe resumption of production as soon as possible," the company said.
Elsewhere, Renold climbed 11%. It has agreed to a GBP186.7 million takeover by MPE.
The Manchester, England-based supplier of industrial chains and related power-transmission products said the offer, which represents a 50% premium to Renold's closing price on May 19, the day before the offer period began, has the backing of Renold's board.
The biggest risers on the FTSE 100 were Endeavour Mining, up 68.00 pence at 2,400.00p, BAE Systems, up 54.00p at 1,939.00p, Fresnillo, up 31.00p at 1,445.00p, Babcock International, up 20.00p at 1,052.00p and Tesco, up 6.60p at 398.20p.
The biggest fallers on the FTSE 100 were IAG, down 12.10p at 316.70p, Schroders, down 12.60p at 355.80p, easyJet, down 15.20p at 543.60p, Intermediate Capital Group, down 50.00p at 1,921.00p and GSK, down 38.00p at 1,511.50p.
Monday's global economic calendar has retail sales and industrial production data in China.
UK inflation figures, UK and US retail sales data and interest rate decisions in the US, UK, Japan, Sweden, China and Switzerland follow as the week progresses.
The domestic corporate calendar is quiet on Monday. Later in the week, industrial equipment rental group Ashtead and housebuilder Berkeley report annual results, while Premier Inn owner Whitbread updates on first quarter trading.
By Jeremy Cutler, Alliance News reporter
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