Oil Prices Jump After Iran Strikes, S&P 500 Futures Reverse

Oil prices surged after US and Israeli strikes on Iran disrupted shipments through the Strait of Hormuz, pushing crude higher across futures contracts. S&P 500 and European stock futures initially rose but later turned lower as markets weighed escalating conflict and uncertainty for global trade. Gold also climbed as investors sought safe-haven assets. Asian equities, including South Korea’s KOSPI, rebounded while China’s market reacted positively to a slower growth target focused on boosting consumption.

Equities

The FTSE 100 closed 0.8% higher on Wednesday, recovering after two days of declines linked to escalating tensions in the Middle East. The FTSE 250 also rebounded, rising 0.9% after previously touching a two-month low. Investors reacted to signs that diplomatic contact between the United States and Iran may be possible, alongside assurances from US President Donald Trump that Washington would support oil shipments through the Strait of Hormuz with naval escorts and political risk insurance.

Among London-listed companies, major banking stocks led the recovery. Shares in HSBC, Standard Chartered and Barclays all closed about 2% higher on Wednesday after earlier losses this week tied to concerns over global economic growth and rising energy prices.

The housing sector moved sharply in the opposite direction. Barratt Redrow closed 3.1% lower after announcing that Ventia chief executive Dean Banks will take over as CEO, with long-serving leader David Thomas preparing to step down after more than a decade in the role. Mid-cap housebuilder Vistry saw a far larger decline, with the shares closing 25.6% lower after the company warned that profit margins would fall in 2026. Vistry also confirmed that chief executive and executive chair Greg Fitzgerald will retire, adding further pressure to the stock.

Oil prices remained elevated because of disruptions around the Strait of Hormuz, a major shipping route for global crude and liquefied natural gas. The continued rise in energy prices has raised concerns about inflation in the UK and globally. Money markets have reduced expectations for near-term interest-rate cuts by the Bank of England, with investors now assigning roughly a one-in-three chance of a rate reduction at the March meeting.

In the United States, Wall Street finished higher on Wednesday as technology stocks rebounded strongly. The S&P 500 closed 0.78% higher at 6,869.50, remaining close to the record closing level reached in January. The Nasdaq Composite rose 1.29% to 22,807.48, helped by strong demand for technology shares that had fallen earlier this year. The Dow Jones Industrial Average gained 0.49%, closing at 48,739.41.

Energy companies moved lower after recent gains tied to rising oil prices. Exxon Mobil closed 1.3% lower while ConocoPhillips finished 2.42% down. Meanwhile, pharmaceutical company Moderna surged 16% after announcing it would pay up to $2.25 billion to resolve a long-running patent dispute related to its COVID-19 vaccine.

Forex & Commodities

The US dollar strengthened early this morning as the escalating conflict between the United States, Israel and Iran continued to unsettle global markets. The dollar index traded around 99.00 after briefly retreating from a three-month high earlier in the week. The euro slipped to $1.161 and sterling also edged lower, trading at $1.334 against the dollar. Currency markets remain sensitive to developments in the Middle East, particularly after Iran launched further missile strikes on Israel overnight.

Expectations for US monetary policy have also shifted. Traders have reduced bets on a Federal Reserve interest rate cut in June following stronger recent US economic figures and rising concerns that higher energy prices could push inflation higher again. President Donald Trump has nominated former Federal Reserve governor Kevin Warsh to lead the central bank, a move that may influence the policy outlook in coming months. Investors are now waiting for US weekly jobless claims later today and the February employment report due on Friday.

Gold prices rose early this morning as demand for safe-haven assets persisted during the conflict. Spot gold traded around $5,153 per ounce, remaining close to recent record highs after a strong rally earlier this year. Gains in bullion were partly limited by the stronger US dollar, which increases the cost of gold for investors using other currencies.

Oil prices also continued to climb as the conflict raised concerns about disruptions to global energy supplies. Brent crude traded near $83.84 per barrel while US West Texas Intermediate reached $77.10 early this morning. Traffic through the Strait of Hormuz remains heavily disrupted, with hundreds of vessels waiting offshore. Iraq has reduced crude production due to storage constraints, while Qatar has declared force majeure on some liquefied natural gas exports.

China also set a 2026 economic growth target between 4.5 and 5 per cent, prompting the yuan to strengthen to about 6.890 per dollar after the central bank set its strongest guidance in nearly three years. Cryptocurrencies including bitcoin and ether weakened early this morning after strong gains in the previous session.