London’s equity markets opened in tentative fashion on Thursday as geopolitical pressure from the Iran conflict continued to suppress risk appetite, with the FTSE 100 caught in a holding pattern while investors weighed Trump’s contradictory signals around the prospect of a negotiated end to the war that has disrupted global oil supplies since the Strait of Hormuz was effectively halted.
The index had been trading narrowly, reflecting a broader institutional posture of caution rather than conviction in either direction.
Iran’s Revolutionary Guard sharpened the language overnight, issuing a warning that it would “extend the war beyond the region” if the United States launched another military strike on Iranian territory. That statement, combined with the foreign minister’s parallel warning that any return to war “will feature many more surprises,” registered across oil markets and filtered through into risk assets globally.
The comments came as Trump himself stated publicly that he had been “an hour away” from ordering a strike on Iran before pulling back, a disclosure that further unsettled traders seeking clarity on the conflict’s trajectory.
Trump’s own positioning has become harder to read. He said this week that the US had “hit them very hard” and might “have to hit them even harder,” while simultaneously describing Iran as wanting to make a deal “so badly.” He then undermined the peace signal by adding he was in “no hurry” to secure any agreement, a combination of statements that offered markets little comfort about a near-term de-escalation.
The Strait of Hormuz, through which around one fifth of the world’s oil supply flows, remains disrupted, and until that changes the inflationary pressure from energy costs remains structurally embedded in market expectations.
Chancellor Rachel Reeves is due to address the House of Commons today on cost-of-living measures, with the government under significant political pressure as consumers absorb the compounding impact of Iran-driven energy price increases alongside existing inflation. Bank of England officials have separately issued warnings against implementing a supermarket price cap, creating a contested policy backdrop that adds domestic uncertainty to the international picture already weighing on the index.
The FTSE 250, which carries a higher domestic revenue bias than the internationally weighted FTSE 100, reflected the UK economic nervousness more directly. The mid-cap index had been consolidating between 21,500 and 22,600 over recent sessions, with volume data from earlier in the week running above the three-month daily average, a signal that institutional positioning decisions are being made rather than deferred.
Nvidia’s after-hours earnings release from Wednesday evening provided a potential circuit-breaker for technology-adjacent stocks, with the chipmaker’s record-breaking revenue figures capable of lifting sentiment across sectors exposed to AI infrastructure spending. UK technology and semiconductor-linked names were watching the implications for their own trading multiples.
Oil’s trajectory remains the most consequential variable for the FTSE 100 more broadly. The energy sector is heavily weighted in the index, and the gyrations in crude prices driven by Strait of Hormuz news flow have created acute intraday volatility in BP, Shell, and their supplier ecosystems. North Sea crude prices have already set recent records during the conflict period.
Until either a credible peace framework emerges or a clear military outcome reshapes the strategic map, markets appear positioned for continued choppiness rather than a decisive directional move. Thursday’s Commons session and any fresh Iran diplomatic development could shift that calculus quickly.
