UK equities posted modest gains on Friday as surging oil prices boosted energy stocks and Lloyds data pointed to renewed pressure on mortgage borrowers.
By 07:30 GMT, the FTSE 100 (LSE:JD.) had risen 0.22%, with Germany’s DAX up 0.33% and France’s CAC 40 gaining 0.26% in parallel moves across European markets.
Sterling softened slightly against the dollar, with GBP/USD slipping 0.07% to 1.3449 as risk sentiment remained fragile amid ongoing geopolitical uncertainty.
Shipping activity through the Strait of Hormuz fell sharply, with Reuters citing Kpler data showing only 33 vessels transited the waterway between Monday and Thursday, compared with 50 during the same period a week earlier.
Just six crude oil tankers departed the strait during the week, while traffic through the Bab al-Mandeb route increased to 26 vessels on Thursday, suggesting some shipping is being redirected away from the disputed waterway.
The disruption followed explosions near Iran’s Qeshm Island on Thursday evening, which the semi-official Fars news agency linked to reported military strikes, sending Brent crude surging almost 4% before extending gains into Friday.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf criticised Washington on social media, writing that “using bullying + broken promises + fake news as leverage is a failed strategy,” describing the US approach as “theater diplomacy.”
Jefferies analyst Mohit Kumar said investors could become “desensitized to the Middle East, as long as oil stays around or below $80,” arguing that a resilient US labour market and strong global liquidity continued to support broader market fundamentals.
Kumar nonetheless identified higher US government bond yields as a key concern, calling 10-year Treasury yields near 4.70% the “biggest worry” and warning that oil prices 25% to 30% above pre-conflict levels would “feed into inflation globally.”
On the prospects for a diplomatic resolution, Kumar said of reports linking Iran and Oman over shipping arrangements that “we are still some distance from a deal,” noting Tehran’s push to restrict US and Israeli vessels from the strategic route would be unacceptable to Washington.
US President Donald Trump acknowledged that certain American weapons stockpiles were “a little bit tighter” than others, while dismissing reports that the five-month conflict had significantly depleted US military supplies.
In UK housing data, Lloyds’ House Price Index showed property prices were unchanged in July after a 0.2% rise in June, with the average UK home valued at £299,253 and annual house price growth slowing to 0.1%, the weakest reading since November 2023.
Amanda Bryden, Head of Mortgages at Lloyds, said “the UK housing market remained steady in July, with the average property price effectively unchanged over the month,” adding that mortgage rates “have edged higher again after easing earlier in the summer.”
Brent crude rose 0.70% to $83.08 a barrel and US West Texas Intermediate added 0.36% to $77.57, while gold futures climbed 1.04% to $4,345.47 an ounce as safe-haven demand intensified.
In UK corporate news, JD Sports (LSE:JD.) appointed former IKEA chief executive Peter Agnefjäll as its new chair, effective 1 September, while Goodwin (LSE:GDWN) entered discussions over the potential sale of its defence business following order delays, according to the Financial Times.