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London open: Stocks drop as US imposes sanctions on Iran
London stocks fell in early trade on Tuesday as investors shunned risky assets after the US imposed sanctions on Iran.
At 0835 BST, the FTSE 100 was down 0.5% at 7,383.24, while the pound was up 0.2% against the dollar at 1.2772 and 0.3% firmer versus the euro at 1.1205.
US President Trump has signed off on a new round of “hard-hitting” sanctions against Iran following its downing last week of a US surveillance drone.
The measures will specifically target Supreme Leader Ayatollah Ali Khamenei and other Iranian officials. US Treasury Secretary Steven Mnuchin said they “go after the supreme leader’s office and lock up literally billions more in assets”.
Iranian Foreign Ministry spokesman Abbas Mousavi said the “fruitless sanctions” mean “the permanent closure of the road of diplomacy with the frustrated US administration”.
Spreadex analyst Connor Campbell said: “Donald Trump’s self-created game of geopolitical whack-a-mole continued on Tuesday. Just as a crack of light breaks through the US-China trade war storm clouds, with the nations’ leaders set to meet in Osaka this week, the situation in the Middle East worsens.
“Understandably this has created some unease amongst investors, so much so that gold has shot up to a six-year high of $1,433 as it added another 0.7% after the bell.”
With gold on the rise, Fresnillo, Centamin, Hochschild Mining and Polymetal all rallied.
Sainsbury’s also bucked the trend, sitting pretty at the top of the FTSE 100 even as the latest data from Kantar showed that it underperformed its big four rivals in the 12 weeks to 16 June, with sales down 0.6%. However, this was half the rate of decline it registered last month, thanks to an increase in the number of affluent customers visiting the retailer.
Oil services company Petrofac was in the red as it said trading was in line with previous guidance, with new order intake of $1.7bn in the year to date. It also said that net debt was expected to be around $100m at June 30, compared with $90m at the end of 2018.
Renishaw ticked lower as it announced the departure of group engineering director Geoff McFarland with effect from 30 June.
In broker note action, Polymetal was upgraded to ‘buy’ at Citi, while ITV was boosted to ‘neutral’ at Macquarie and Experian was downgraded to ‘neutral’ at Macquarie.
PZ Cussons was under the cosh after an initiation at ‘sell’ by Panmure Gordon.
