FTSE 100 Slides as Middle East War Fears Shake Markets and Oil Prices Surge
Market Reaction and Economic Impact
May 21 (Reuters) - UK's blue-chip shares fell on Thursday, pressured by downbeat data and worries that the Middle East conflict could remain deadlocked.
The blue-chip FTSE 100 index fell 0.43% as of 11:15 am GMT, while the midcap FTSE 250 was 0.18% higher.
Middle East Conflict and Oil Prices
• Iran's Supreme Leader has issued a directive that the country's near-weapons-grade uranium should not be sent abroad, Reuters reported, hardening Tehran's stance on one of the main U.S. demands at peace talks.
• The prolonged conflict has already pushed up oil prices and intensified concerns about inflation.
Economic Data and Business Sentiment
Business Activity and Inflation Concerns
• Separately, a survey on Thursday showed that British companies are suffering the most widespread drop in activity in over a year, due to the economic fallout from the war and political uncertainty at home.
• "These figures... lend some tentative support to other evidence that suggests the conditions for a long period of high inflation are not in place," said Paul Dales, chief UK economist at Capital Economics.
Recent Economic Indicators
Inflation and Unemployment
• Earlier this week, data showed that inflation in April was softer than expected, while the unemployment rate ticked up.
Factory Orders
• Meanwhile, factory orders in May contracted at the fastest rate since September 2020, according to the Confederation of British Industry.
Stock Market Movers
Biggest Laggards
• Shares of automotive marketplace Autotrader slipped 9.1% after the company reported slower sales, and were the biggest laggard on the FTSE 100.
Sector Performance
• Medical equipment and services shares fell 2.7%, dragged down by a 7.9% drop in medical equipment maker Convatec, which flagged margin pressure.
(Reporting by Niket Nishant in Bengaluru; Editing by Vijay Kishore)
