London's blue-chip index managed a small advance on Thursday, with the FTSE 100 rising 0.49% as of 03:25 ET (07:25 GMT), despite renewed hostile exchanges between the United States and Iran. Investors were simultaneously preparing for a key monetary policy decision from the European Central Bank scheduled for later in the day.
Across mainland Europe, reactions were mixed. Germany's DAX slipped 0.11% while France's CAC 40 edged up 0.41%. Currency markets saw sterling strengthen by 0.14% against the dollar to $1.3388.
Commodity markets reflected the market mood. Brent crude traded broadly flat at $93 a barrel and WTI crude was unchanged at $90.01 a barrel. Safe-haven buying was evident in the gold market, with spot gold rising 0.90% to $4,107.87 a troy ounce.
Geopolitical escalation
The market backdrop was dominated by a second consecutive night of US airstrikes on Iranian targets and subsequent ballistic missile activity across the Gulf region. U.S. Central Command said the strikes targeted Iranian military surveillance capabilities, communications systems and air defense sites.
"U.S. Marine Corps, Air Force, and Navy assets fired precision munitions on Iranian targets that posed a threat to U.S. forces and international commercial ships transiting regional waters," CENTCOM said in a statement.
President Donald Trump told Fox News that the United States had launched 49 Tomahawk missiles against various targets, including sites located about 40 miles from Tehran. He warned that further military steps could follow if Iran did not accept a proposed agreement.
Iran’s Islamic Revolutionary Guard Corps responded by firing 12 ballistic missiles at Al-Azraq Air Base in Jordan and claimed it had struck U.S. military sites in Kuwait and Bahrain. Authorities in Bahrain activated air raid sirens; the interior ministry said air defenses intercepted Iranian aerial attacks and reported that an 11-year-old girl sustained a light injury from falling debris. Kuwait temporarily closed its airspace before restoring normal operations.
At CENTCOM headquarters in Tampa, Florida, U.S. Defense Secretary Pete Hegseth stated that the ceasefire interval had been used to refine intelligence and target sets "in a way that are far, far beyond even the beginning of Operation Epic Fury."
Meanwhile, Iran’s Khatam al-Anbiya Central Headquarters asserted that the Strait of Hormuz had been closed to oil tankers and commercial ships; CENTCOM rejected that claim and said commercial vessels were "continuing to transit in and out of the Strait of Hormuz."
Market commentary and political signals
Market analysts pointed to the Middle East developments as the principal external risk to financial markets. Andreas Lipkow, chief market analyst at CMC Markets, said the situation "continues to represent the dominant external risk factor for financial markets," and described the environment as "complex and uncertain."
Political voices in the United States highlighted fissures within allied approaches. Vice President JD Vance told CBS News that U.S. and Israeli interests were not always aligned, and said Prime Minister Benjamin Netanyahu had "certainly gotten some things wrong" in his handling of the Iran crisis.
UK corporate roundup
- Primark named Lucy Slinger as chief financial officer ahead of its planned spin-off from Associated British Foods, a step intended to strengthen leadership for its standalone future.
- Intertek received an extension until June 18 for EQT AB to put forward a formal takeover offer valued at £9.4 billion, a potential transaction that would rank among the larger private equity deals in the UK market.
- Wizz Air reported an annual operating profit of €139.7 million, beating profit expectations despite disruptions linked to the Middle East situation. The airline withheld guidance for fiscal year 2027, citing uncertainty.
Investor focus and near-term outlook
Traders and portfolio managers entered the ECB decision with heightened sensitivity to how central bank guidance might interact with the ongoing geopolitical risk. The combination of renewed military activity, disputed statements about shipping safety in key waterways, and corporate updates that reflect regional disruption left market participants weighing both policy direction and event-driven volatility.
Given the mix of calm in energy prices, a notable jump in gold, and selective corporate developments in the UK, market participants were positioned for potential changes in risk appetite depending on the ECB outcome and the near-term evolution of events in the Gulf region.
For now, the FTSE's modest gain suggests a degree of resilience among British equities, even as the broader landscape remains shaped by geopolitical unpredictability and monetary policy anticipation.