UK stocks drop as Middle East in focus
The blue-chip index FTSE 100 declined 1.5% and the GBP/USD slipped 0.4% against the dollar to 1.3320
British stocks and their European peers continued to drop on Thursday after trading in the green the previous day, with the situation in the Middle East still in focus as markets expect the Middle East war to continue for several more weeks, while investors also digested corporate earnings.
The blue-chip index FTSE 100 declined 1.5% and the GBP/USD slipped 0.4% against the dollar to 1.3320. DAX index in Germany dropped 1.6%, the CAC 40 in France also slid 1.5%.
Jefferies maintains its initial assessment that the war could last 2-3 weeks.
Jefferies expects to fade certain market moves. In rates, Jefferies views front-end repricing in Europe and the UK as unjustified and favours buying the front end in both regions.
The firm maintains the European Central Bank is more likely to cut than raise rates this year, though no change is the base case. Markets are pricing in a rate hike by Q1 2027, which Jefferies considers unjustified. For the UK, the firm disagrees with recent front-end selloff and maintains a terminal rate view of 3%.
Wizz Air Holdings PLC shares fell on Thursday after the budget carrier issued an unscheduled profit warning, saying the Middle East crisis would cost it nearly €50 million ($58.53 million) in fiscal year 2026 net profit and push earnings below its guidance range of €25 million to -€25 million ($29.27 million to -$29.27 million). The airline said the estimate was based on spot jet fuel prices and current foreign exchange rates, assuming both remain at current levels for the rest of the fiscal year.
Entain PLC beat its full-year earnings forecast and doubled its target for offsetting Britain’s looming online gambling tax increase on Thursday, sending shares in the FTSE 100 sports betting group up more than 5%. The London-listed group reported underlying earnings before interest, tax, depreciation and amortisation of £1.16 billion ($1.57 billion) for 2025, up 8% on a constant currency basis and above the top of its £1.10 billion to £1.15 billion ($1.49 billion to $1.56 billion) guidance range.