British stocks drop as Gulf tensions offset stronger UK GDP

The FTSE 100 was down 0.37%, as of 07:25 GMT, extending losses from Wednesday’s close

British stocks fell on Thursday as Iran’s threat to strike regional infrastructure overshadowed stronger-than-expected UK growth data, with strategists warning the Strait of Hormuz standoff could persist for weeks.

The FTSE 100 was down 0.37%, as of 07:25 GMT, extending losses from Wednesday’s close. Germany’s DAX slid 0.22% and France’s CAC 40 shed 0.21%.  Sterling was down 0.01% to $1.3535.

UK GDP data released Thursday by the ONS beat expectations. The economy grew 0.7% in the three months to May, ahead of forecasts of 0.5%, with annual growth accelerating to 1.3%, the fastest pace in 13 months. Monthly GDP increased 0.1% in May, recovering from a 0.1% decline in April, driven by a 0.3% rise in services.

Traffic through the Strait of Hormuz “has slowed down significantly,” Jefferies strategist Mohit Kumar said in a note.

Kumar said the escalation marks a shift from previous rounds, which had been meant as an objective to gain an upper hand in negotiations and to eventually de-escalate the situation.

Jefferies said it was keeping risk levels low while still expecting eventually we will get a deal even if it’s a fudge, with the standoff seen persisting for a few weeks, keeping oil on an upward pressure.

Brent crude was last down 0.38% at $84.63, WTI slid 0.08% to $79.54. Gold futures dropped 0.55% to $4,029.27, spot gold down 0.88% at $4,0245.62.

Ocado said it is pursuing multiple new U.S. retail partnerships and maintained its forecast to turn cash flow positive despite weaker underlying first-half earnings.

TotalEnergies said higher oil and gas prices driven by Middle East conflict are expected to boost its second-quarter profits.

Frasers Group withheld its fiscal 2027 outlook, citing uncertainty from ongoing takeover bids involving Hugo Boss and Accent Group.