The FTSE 100 traded essentially flat on Friday as robust UK economic growth data provided some reassurance but geopolitical tensions in the Strait of Hormuz weighed on sentiment.
The index was down just 0.03% at 07:25 GMT, while Germany’s DAX gained 0.28% and France’s CAC 40 rose 0.55% in early European trading.
Sterling edged higher, rising 0.09% against the US dollar to trade at $1.3524, supported by the stronger-than-expected domestic growth figures released earlier in the session.
UK gross domestic product grew 0.4% in July, exceeding analyst expectations and extending the expansion recorded during the first half of the year, according to the Office for National Statistics.
The economy also expanded 1.6% from a year earlier, marking the fastest annual rate of growth since February 2025 and offering some relief to investors concerned about the broader global outlook.
ONS Director of Economic Statistics Liz McKeown said “ongoing strength in the services sector was only partially offset by falls in both production and construction,” adding that artificial intelligence appeared to be supporting software development.
Geopolitical risks remained firmly in focus after Iran’s Revolutionary Guard Corps said its navy had struck a US “Saildrone-type” unmanned vessel in the Strait of Hormuz, claiming it had “thwarted its aggressive mission.”
The incident followed an International Atomic Energy Agency resolution accusing Iran of “noncompliance” with nuclear non-proliferation commitments and referring the matter to the UN Security Council.
Iran’s UN envoy Gholamhossein Darzi responded by describing the accusations as “political and not technical in nature,” signalling little prospect of a rapid diplomatic resolution to the standoff.
Preliminary ship-tracking data showed just seven vessels transited the Strait of Hormuz on Thursday, down sharply from 11 the previous day and well below the 10-day average of 15, according to Reuters.
Analysts at ING said oil’s performance “reflects a market now repricing both the duration and severity of the conflict, along with a clearer recognition of the mounting threat to regional supply,” also flagging risks to Saudi energy infrastructure.
Despite those supply concerns, Brent crude declined 2.12% to $105.35 a barrel and WTI fell 1.76% to $100.69, while gold futures slipped 0.38% to $4,390.25 and spot gold rose 0.76% to $4,349.24.
Housebuilder Berkeley Group (LSE:BKG) said buyer caution and UK political uncertainty were dampening housing demand, while calling on the government to reform stamp duty and planning regulations to help stimulate activity.
Despite the challenging market backdrop, Berkeley has maintained its target of £1.4 billion in pre-tax profit over four years, signalling confidence in its longer-term strategy even as near-term conditions remain subdued.
Rail ticketing platform Trainline (LSE:TRN) reported first-half net ticket sales of £3.3 billion and underlying revenue of £233 million, reaffirming its FY2027 guidance and announcing a new £100 million share buyback programme.