British equities retreated on Wednesday, with the Ftse 100 finishing the session 0.56 per cent lower as tensions between the United States and Iran continued to intensify.
Investors grew increasingly concerned as attacks persisted on vessels navigating the Strait of Hormuz, while energy facilities across the Gulf region remained under threat.
Danni Hewson, the head of Financial Analysis at AJ Bell, said: “The Ftse 100 was once again on the back foot as investors weighed up the latest developments in the Middle East.”
Evidence has also surfaced indicating Tehran intends to sustain its campaign of disruption along the vital shipping corridor, further rattling markets.
President Donald Trump has suggested the war in Iran could be coming to an end | REUTERS
In response to the supply crisis, the International Energy Agency unveiled its largest ever coordinated stockpile release, with all 32 member nations agreeing to deploy 400 million barrels from emergency reserves. Britain will contribute 13.5 million barrels to the effort.
Energy Secretary Ed Miliband said: “With this action, the UK is playing our part in working with our international allies to address the disruption in oil markets.”
He added that the country maintains robust and varied energy supplies, noting the price cap continues to shield household bills until July.
However, the unprecedented intervention failed to calm market nerves on Wednesday.
Stocks around the world have been hit by the conflict | GETTY
Oil prices have soared since the strikes on Iran, with costs peaking on March 8 at almost $120 | OILPRICE.COM
Markets have experienced volatile swings throughout the week, plunging sharply on Monday when oil prices spiked before staging a recovery, only to slide back into negative territory on Wednesday.
Ms Hewson warned that extended disruption poses significant dangers beyond immediate market turbulence.
She said: “The longer the disruption goes on, the greater the impact on energy prices and in turn global inflation. This then has implications for interest rates too.”
Some comfort emerged from US inflation data released on Wednesday, which matched forecasts precisely, suggesting consumer prices remained steady before the current energy shock took hold.
The Ftse continues to take a hit in response to the economic crisis
|
GETTY / GOOGLE
Among individual stocks, Legal & General suffered the steepest decline on the Ftse 100, tumbling 6.77 per cent despite reporting higher annual profit and revenue alongside a £1.2billion share buyback programme.
RBC Capital Markets noted that Solvency II figures significantly missed expectations, while asset write-downs in the company’s asset management division contributed to a net income shortfall.
Precious metals miners also fell as gold prices softened, with banks and mining stocks joining the day’s losers.
Across the Atlantic, Wall Street recorded more muted declines, with America’s position as a net exporter of oil and gas providing greater insulation from the crisis compared to European and Asian markets.