The UK’s FTSE 100 closed at a more than three-week low on Monday as a stronger pound dented shares of international firms, while investors looked for any signs of escalation in the ongoing Middle East conflict.
The internationally exposed FTSE 100 index dipped 0.2% to finish the session at its weakest level since May 30.
Broad dollar weakness following dovish remarks from a Federal Reserve official lifted the pound by 0.4%, in turn weighing on shares of global companies including HSBC and British American Tobacco.
The domestically focussed midcap index closed 0.1% lower.
Investors braced for Iran’s possible response to U.S. airstrikes on some of the country’s nuclear facilities over the weekend, a major escalation of conflict in the Middle East – a region that is crucial to global oil supply.
Oil prices, however, eased from a five-month high as the markets tried to gauge the impact on transit of oil and gas via the Strait of Hormuz. [O/R]
Britain’s oil majors Shell and BP inched higher, while Harbour Energy gained 1%.
Airline stocks, including Easyjet, Wizz Air <WIZZ.L> and British Airways parent International Consolidated, dropped between 1.1% and 2.4%, hurt by elevated crude prices.
Markets also kept their focus on the latest set of mergers and acquisitions in the UK, with Spectris’ takeover marking the biggest acquisition in Britain this year.
Spectris’ shares jumped 15.7% as the precision instruments maker agreed to a 4.4-billion-pound ($5.9 billion) debt-inclusive takeover deal by private equity firm Advent over a rival proposal from KKR.
Healthcare real estate investor Primary Health Properties dropped 4.2% after Assura backed a 1.78-billion-pound ($2.4 billion) takeover deal by its rival.
Meanwhile, economic data showed that British business activity slightly grew in June, but worries remained with the conflict in the Middle East.
Across the Atlantic, Federal Reserve Chair Jerome Powell is set to face Congress on Tuesday and Wednesday. Traders will keep a keen eye on his outlook for the economy and interest rates.
(Reporting by Twesha Dikshit and Sruthi Shankar）
