Markets Sell Off as Israel Strikes Iran, Gold Rallies

Equities

On Thursday, the FTSE 100 Index saw a modest increase of 0.4%, demonstrating resilience despite its underperformance relative to other European indices. Among UK companies, the standout was Hipgnosis Songs Fund, which surged by 30.5% following news that Concord Chorus plans to acquire it for $1.4 billion. easyJet also reported gains, rising 2.3% after an encouraging update on its winter performance and optimistic projections for summer bookings. National Grid, another prominent name, climbed 1.7% after upgrading its profit guidance for the 2023/24 financial year. However, Rentokil was on the opposite end of the spectrum, dropping 7.6% after releasing its first-quarter trading update.

Across the Atlantic, the S&P 500 experienced a slight decline, falling 0.24% to close at 5,010.19 points, marking its fifth consecutive session of losses. This trend follows a five-month rally which began in November, initially spurred by anticipations of rate cuts by the Federal Reserve. Despite these hopes, comments from Fed officials, including Chair Jerome Powell, have tempered expectations, suggesting a pause in rate adjustments due to persisting inflation and a strong labour market.

Netflix saw a 4% decrease in after-hours trading following the announcement of its quarterly results.

Major losses were recorded by Equifax, which fell 8.49% after forecasting second-quarter revenue below estimates, and Las Vegas Sands, which tumbled 8.66% despite surpassing quarterly expectations, as concerns about its Macau operations led to lowered price targets by several brokerages.

Forex & Commodities

The US dollar strengthened on Thursday, buoyed by a robust set of economic data and comments from New York Fed President John Williams, who suggested there was no immediate need for interest rate cuts. This sentiment was reflected in the dollar index, which edged up 0.2% to 106.15. In contrast, the British pound slipped slightly to $1.2440 amid broader market movements.

Gold prices also saw a significant increase, rising 1% to $2,384.83 per ounce. This uptick was influenced by ongoing geopolitical tensions in the Middle East, which heightened the appeal of the metal as a safe haven.

Oil prices surged on Friday, following reports of an Israeli attack on Iran, which raised concerns about potential disruptions in Middle East oil supplies. Brent futures climbed $1.40 to $88.51 a barrel, while West Texas Intermediate increased by $1.38 to $83.48 per barrel. These movements reflect the market's sensitivity to geopolitical risks that could impact global oil supply chains.