LONDON MARKET MIDDAY: Stocks move lower as war worry comes to fore

Thu, 21st May 2026 12:10

(Alliance News) - Stock prices in Europe were lower on Thursday afternoon, as eyes remain on US-Iran talks and after survey data revealed the conflict has hit the eurozone and UK economies.

Reuters reported that Iran's supreme leader has asserted that the nation's enriched uranium must not be sent abroad. Uranium is a key sticking point in peace talks.

The FTSE 100 index traded down 58.70 points, 0.6%, at 10,373.64. The FTSE 250 edged up 12.72 points, 0.1%, at 22,851.10, and the AIM all-share was up 1.56 points, 0.2%, at 794.37.

The Cboe UK 100 was down 0.6% at 1,031.55, the Cboe UK 250 was up 0.1% at 19,772.27, and the Cboe small companies rose 0.6% at 18,646.02.

In Paris, the CAC 40 was down 0.6%, while the DAX 40 in Frankfurt fell 0.2%. Before the Reuters report, the duo were in the green.

A barrel of Brent rose to USD107.28 early Thursday afternoon from USD105.26 at the time of the London equities close on Wednesday. Gold declined to USD4,515.78 an ounce from USD4,536.32.

"Although there is hope that talks between the US and Iran will bear fruit, after Trump claimed discussions were entering their final stages, neither side seems to be in a rush. Amid this uncertainty about where negotiations really do stand, oil prices have started to creep higher after their fall yesterday," Wealth Club analyst Susannah Streeter commented.

"There's a realisation that even if the Strait of Hormuz were to fully reopen next week, supply snarl-ups will continue for many months. Extensive damage to facilities will take much longer to repair, with Abu Dhabi National Oil Company warning that a full recovery in flows of oil is unlikely before late next year. Energy intensive industries are left counting the high cost of this disruption. Airlines have had to deal with a tremendous amount of unpredictability in the availability of jet fuel, disruption to routes and customer confidence. As expected, half-year losses at easyJet have widened painfully."

easyJet shares fell 0.5%. It warned of higher fuel costs and lower visibility. Its pretax loss widened to GBP552 million in the six months to the end of March from a GBP401 million loss a year ago. Total revenue increased 12% to GBP3.95 billion from GBP3.53 billion.

Looking ahead, easyJet said there "remains uncertainty" over the financial outturn for financial 2026 due to the "lower than normal visibility of forward bookings".

easyJet is 72% hedged at USD726 per metric tonne. It said every USD100 per metric tonne movement in price equates to around GBP35 million in fuel costs.

Sterling fell to USD1.3420 on Thursday afternoon from USD1.3456 late Wednesday afternoon. Against the euro, it declined to EUR1.1561 from EUR1.1568.

The UK private sector slipped into contraction in May, with activity in services declining, a survey showed on Thursday.

The S&P Global flash composite purchasing managers' index fell to 48.5 points in May, a 13-month low, from 52.6 in April. Falling below the 50 point neutral mark, the number suggests the UK private sector has entered decline.

S&P Global Market Intelligence analyst Chris Williamson commented: "The UK economy is facing a perfect storm, as rising political uncertainty adds to the growing impact from the war in the Middle East. Businesses are reporting falling output, surging inflation, supply shortages and job cuts in May."

The eurozone private sector fell deeper into decline this month, a survey revealed on Thursday, as the conflict continued to heap pressure on services, with growth in manufacturing cooling.

The flash composite PMI fell to a 31-month low of 47.5 points in May, from the final April tally of 48.8.

The eurozone economy will expand less than expected this year and inflation will be significantly higher than forecast, the EU executive said Thursday, as the Middle East war and subsequent energy shock take their toll.

The European Commission said the single currency area's economy was expected to grow 0.9% in 2026, down from a previous prediction of 1.2%.

The euro fell to USD1.1604 from USD1.1632. Against the yen, the buck advanced to JPY159.13 from JPY158.69.

The yield on the 10-year US Treasury stretched to 4.62% early Thursday afternoon, from 4.58% at the time of the London equities close on Wednesday. The 30-year yield widened to 5.15% from 5.11%.

ING analysts commented: "The macro background is also making it harder to aggressively bet on the USD downside. The FOMC April minutes, published yesterday, were hawkish, with 'many' members asking to signal that the next move could be a hike. That translates into a greater risk that Treasury yields will be stickier on the downside than they have been on the upside. Even after yesterday's de-escalation headlines, 17bp of tightening remains priced into the Fed funds futures curve by December. That pricing should be unwound if a US-Iran deal is ultimately reached, but a quick return to pricing rate cuts looks far from guaranteed."

In New York, the Dow Jones Industrial Average is called down 0.1%, the S&P 500 down 0.3% and the Nasdaq Composite 0.4% lower.

Scottish Mortgage Investment Trust added 1.1% as SpaceX unveiled IPO plans. The filing with the Securities & Exchange Commission – the first time SpaceX has publicly disclosed detailed financial information - revealed that the company generated USD18.7 billion in revenue in 2025 and posted an operating loss of USD2.6 billion as it poured money into next-generation rocket development and AI.

ICG was the best FTSE 100 performer, adding 3.3%. The London-based private equity asset manager reported assets under management of USD126 billion as at March 31, up 13% from USD112.5 billion a year prior. Fee earning AuM was USD86.5 billion, up 15% from USD75.1 billion.

ICG shares are down around 7% year-to-date, amid private credit market worries, but are up by some 30% from a March trough.

Defence technology company Qinetiq Group swung to annual profit and it extended a share buyback.

The stock rose 10%.

Pretax profit in the year to March 31 amounted to GBP155 million, swinging from a loss of GBP106 million. Revenue edged down 0.5% to GBP1.92 billion from GBP1.93 billion.

Qinetiq's dividend was raised by 24% to 11.00 pence per share from 8.85p, it adds, and it expands its share buyback by GBP200 million, "commencing in March 2027, when we complete our current buyback commitment".

Nexteq slumped 19%. The technology solutions provider said it continues to grapple with a "challenging trading environment". The Quixant division, which serves the land-based gaming market, has seen trading conditions "impacted indirectly by US tariffs". "These factors have affected demand resulting in the continued softening of order coverage, meaning the board now believes that revenue for 2026 will fall below its previous expectations. The board believes these factors will be temporary albeit it is difficult to accurately predict when they will abate given current macro-economic uncertainty," Nexteq said.

Nexteq now expects revenue to be 15% below prior market expectations, which it put at USD85.0 million.

Still to come on Thursday is a US flash PMI reading at 1445 BST, after weekly jobless figures at 1330 BST.

By Eric Cunha, Alliance News news editor

Comments and questions to newsroom@alliancenews.com

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