FTSE plunges to three-month low and sheds another 200 points as Trump steps up threats to Iran
FTSE100 It turned red once again this morning, hitting a three-month low as President Trump escalated his threats against Iran over the weekend.
London’s main index lost 1.75 percent, or 170 points, at the open after finishing last week down 3.34 percent at 9,918.33, the lowest level since late December.
As of 9.30 in the morning, it lost 200 points and fell 2 percent to 9,717.
Investors are pulling back after Trump threatened over the weekend to ‘destroy’ Iran’s power plants if Iran does not reopen the Strait of Hormuz by the end of today. Iran has warned that it will target most of the energy fields in the region in retaliation.
As investors brace for a protracted conflict, reports of preparations for the deployment of US troops in Iran are also causing concern.
Iran’s declaration of force majeure in oil fields operated by foreign companies led to a new rise in Brent crude oil, which reached $ 118 per barrel last week and then closed at $ 112.19. This morning it rose 1 percent to $113.
Trump told Iran to open the Strait of Hormuz before the end of the day, otherwise it will face new attacks
IG chief analyst Chris Beauchamp said: ‘Investors who spent the weekend monitoring new attacks in the Middle East are now waiting to see what happens when Trump’s 48-hour window expires tonight.
‘But they were in no mood to hang around and continued to sell stocks and precious metals.
‘Every day the war continues, it causes more damage to the global economy and inflation higher, the chances of recession increasing by the hour.’
The conflict damaged major energy facilities in the region and effectively halted shipping through the Bosphorus.
Analysts estimate a loss of 7 million to 10 million barrels per day in oil production in the region.
The International Energy Agency, which decided to release a record amount of oil to calm the markets at the beginning of this month, warned of a ‘very serious’ energy crisis.
Executive Director Fatih Birol said the impact of the war was worse than the sum of the two oil shocks of the 1970s.
Birol also warned that at least 40 energy facilities in the region were so badly damaged that even an end to the conflict would not immediately restore oil supplies.
Gas prices in the UK fell to around 154 pence per thermal this morning; This is down from last week’s 170p but remains at an almost three-year high.
This will raise fears that the UK is facing the worst energy shock in decades and that incomes will be depressed in an already stagnant economy.
The Prime Minister will later lead a Cobra meeting with the Chancellor, Bank of England Governor Andrew Bailey and others on the economic impact of the war.
UK borrowing costs rose again this morning; The 10-year gold yield increased by 0.06 points to 5.06 percent, its highest level since 2008.
“With stocks giving up strong early-year gains, yields rising and even gold hurting, investors are running out of places to hide,” said Richard Hunter, head of markets at Interactive Investor.
The precious metal fell 6 percent to $4,215 per barrel, given its inverse relationship with the dollar. It brings its losses to over 21 percent since the beginning of the war.
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