A US military strike on Iranian territory sent fresh tremors through global markets on Tuesday, compounding the uncertainty already gripping investors on the opening day of America’s mid-term elections.
President Donald Trump confirmed the attack in a Fox News interview, saying forces had destroyed an Iranian anti-aircraft facility on Qeshm Island in the Strait of Hormuz, describing it as a “minor attack.”
His words — “They built an anti-aircraft facility… As soon as it was completed, we hit it last night very nicely” — did little to calm traders watching events unfold during one of Washington’s most politically charged days in years.
The strike came just hours after Trump had posted on Truth Social that “Iran wants a settlement, as soon as possible,” a mixed signal that David Morrison, analyst at Trade Nation, suggested offered little genuine hope, saying the prospect of a peace deal “being reached anytime soon looks slim at best.”
London’s benchmark index bore the brunt of the day’s anxiety, with the FTSE 100 shedding 122.90 points to close at 10,638.43, a decline of 1.1% that left it among the worst performers in Europe.
The FTSE 250 slipped 120.94 points, or 0.5%, to 24,674.91, while the AIM all-share edged 0.4% lower to 754.60, reflecting broad-based caution across UK equities.
Continental bourses were similarly subdued, with Frankfurt’s DAX 40 retreating 0.5% and Paris’s CAC 40 shedding 0.2%, though Wall Street showed a more divided picture by the time London markets closed.
The Dow Jones Industrial Average was down 0.3% in New York, while the S&P 500 gained 0.5% and the Nasdaq Composite advanced 0.9%, suggesting some investors were positioning for a Democrat-driven policy shift.
All 435 seats in the US House of Representatives are being contested, with Republicans defending a slim majority and Democrats requiring a net gain of just four seats to seize control of the chamber.
The senate contest is similarly tight, with 35 seats in play; Republicans currently hold 53 seats to the Democrats’ 47, meaning the opposition again needs a net swing of four to secure a majority.
Ulrike Hoffmann-Burchardi, global head of equities at the UBS Chief Investment Office, said: “The blue sweep remains our highest probability outcome, though we note the senate remains closely fought and the eventual size of any majority is uncertain.”
She added that “polling in a number of senate races shows an outcome that lies within the margin of error,” cautioning that past elections have shown polls can miss key drivers that only become clear once voting ends.
Amid the political noise, a resilient US labour market offered some counterweight, with the Bureau of Labour Statistics reporting job openings climbed to 7.523 million in September, well above the FXStreet consensus forecast of 7.13 million and up from a revised 7.190 million in August.
A more comprehensive US jobs report is due Friday, with analysts expecting the economy to have added 65,000 positions in October, a significant pickup from the 29,000 recorded in September.
Weak metals prices amplified selling pressure in London, with gold falling to $3,933.38 an ounce from $3,968.02 the previous session, while silver dropped 1.6% and copper fell 2.5%.
Those moves hit miners hard, with Endeavour Mining tumbling 4.7%, Antofagasta falling 3.5%, and both Glencore and Anglo American declining 2.8% apiece.
Bermuda-based insurer Hiscox bucked the gloom, rising 3.0% after reporting a nearly 10% rise in insurance contract written premiums across the first nine months of 2026, with the company noting that few natural catastrophes had offset shipping losses tied to Middle East conflict.
AB Foods, owner of Primark, Twinings, Hovis Bakeries, and Jordans cereals, fell 2.2% after full-year results disappointed investors, with the company trimming its grocery outlook and warning its sugar division would remain loss-making.
Flexible workspace provider International Workplace Group surged 8.6% after saying it expects to beat full-year consensus for 2026, tightening its adjusted Ebitda guidance to above the current market consensus of $599 million.
Drax gained 6.6% after the North Yorkshire electricity generator announced a partnership with New York’s Brookfield Asset Management and its UK AI infrastructure platform Radiant to develop a data centre exceeding one gigawatt at Drax Power Station, with Brookfield estimating total investment including semiconductor chips could surpass £20 billion.
Wednesday brings a busy slate including UK services PMI at 9.30am, eurozone inflation data, US trade figures, the ADP jobs report, half-year results from Marks and Spencer, and a trading statement from housebuilder Barratt Redrow.