LONDON MARKET OPEN: Lower On Middle East Tension But Oil Stocks Rise

(Alliance News) - Share prices in London were down on Friday morning as risk appetite waned amid heightened geopolitical tensions.

The FTSE 100 index was down 27.90 points, or 0.4%, at 7,576.40 early Friday. The mid-cap FTSE 250 index was 81.08 points, or 0.4%, lower at 22,027.21, and the AIM All-Share index was down 0.1% at 962.87.

The Cboe UK 100 index was down 0.4% at 12,832.56. The Cboe 250 was 0.3% lower at 19,940.39, and the Cboe Small Companies flat at 12,280.49.

In mainland Europe, the CAC 40 in Paris was down 0.6%, and the DAX 30 in Frankfurt was 0.9% lower.

Financial markets in Japan remain closed for the New Year's holiday. In China, the Shanghai Composite index ended down 0.1%, while the Hang Seng index in Hong Kong closed down 0.4%.

Iran's Supreme Leader Ayatollah Ali Khamenei has threatened the US with "harsh retaliation" after the killing of influential Iranian General Qassem Soleimani, Iranian state television reported on Friday.

Soleimani is the Commander of Iran's Quds Force, a unit in the Iranian Revolutionary Guards. Soleimani's path would continue without him, but the perpetrators would face severe revenge, Khamenei said.

The Defense Department in Washington confirmed earlier that Soleimani was killed in an attack near Baghdad airport in the early hours of Friday, in what the US described as "defensive action" strikes.

Soleimani was killed along with with the deputy head of Iraq's powerful Shiite Hashd Shaabi militia, Abu Mahdi al-Mohandes, the group said.

Oil prices surged in response. Brent was trading at USD68.30 a barrel early Friday, up 3.9% from USD65.76 at the London equities close on Thursday.

Gold, traditionally a safe-haven investment, jumped to USD1,540.70 an ounce, up 0.8% from USD1,527.98 late Thursday.

On the London Stock exchange, oil producers BP and Royal Dutch Shell and gold miner Fresnillo were in the green, benefiting from the move in commodity prices. BP was up 1.7%, the best performer in the FTSE index. Shell's A shares were up 1.3% and B shares were 1.1% higher. Fresnillo was up 1.3%.

Meanwhile, Premier Oil was atop the FTSE 250 index, up 6.3%, while Tullow Oil was up 3.8%.

The dollar also was rising. Sterling was quoted at USD1.3108 early Friday, soft on USD1.3155 at the London equities close on Thursday.

In other currencies, the euro was trading at USD1.1157 early Friday, soft on USD1.1185 late Thursday. However, against the yen, the dollar was at JPY107.96, down slightly from JPY108.33.

Outside of commodities stocks, Next started the London session 1.1% higher after it upped its annual profit guidance and said it expects further improvement in financial 2021 after fourth-quarter sales came in ahead of internal forecasts.

The FTSE 100-listed retailer reported that total full price sales - which include interest income - grew by 5.2% on a year before in the period from October 27 to December 28. Next said the result was 1.1% ahead of its internal forecasts.

"We believe our sales performance in the period was helped by a much colder November than last year and improved stock availability in both our Retail stores and Online," Next said in its statement Friday.

Therefore, Next increased its pretax profit guidance for the financial year to the end of January by GBP2 million to GBP727 million, which will represent a 0.6% growth on last year. Next said it expects full price sales growth of 3.9% in financial 2020, which is 0.3 percentage point ahead of its guidance given in October.

Tobacco and e-cigarettes producers Imperial Brands and British American Tobacco were up 0.5% and 0.2%, respectively. On Thursday, the US Food & Drug Administration said cartridge-based e-cigarettes in flavours other than tobacco or menthol will become illegal unless specifically authorised by the government.

In September the White House had promised a full ban, amid an outbreak of severe pulmonary disease that has killed seven people and sickened hundreds, but this was scuppered by industry pressure.

The move was welcomed by BAT, which on Friday said the new ruling provides clarity and is expected to return the US vapour market to stability, following a period of "disruption and uncertainty".

The economic events calendar on Friday has UK construction PMI at 0930 GMT.

By Evelina Grecenko; evelinagrecenko@alliancenews.com

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