Geopolitical Escalation Between U.S. and Iran Drags Down FTSE 100

The FTSE 100 declined on Monday, closing at 10,589.28, as escalating tensions in the Middle East triggered a sell-off across several key sectors. The market reaction followed a breakdown in peace negotiations and direct military confrontations between the United States and Iran. Tensions spiked after Iran rejected a second round of peace talks, citing excessive U.S. demands and a continuing naval blockade. The situation deteriorated further after the U.S. seized an Iranian vessel near the Strait of Hormuz, prompting Tehran to launch drone attacks against U.S. military ships. The geopolitical instability sent energy markets surging, with Brent crude futures climbing over 5% and WTI crude futures rising more than 6%. This spike fueled investor concerns regarding renewed inflation and the potential for higher interest rates, prompting a broader exit from equity counters. The FTSE 100 dropped 78.35 points, or 0.73%. Mining stocks were hit particularly hard, with Antofagasta falling 4.55%, Fresnillo losing 2.7%, and Anglo American declining 2.2%. Airlines also suffered, with IAG and EasyJet dropping 3.4% and 2% respectively as fuel costs rose. Conversely, energy giants BP and Shell gained 3.1% and 2.3%, respectively, benefiting from the jump in crude prices. In a separate corporate development, engineering firm Renishaw saw its shares soar 7% after the company raised its full-year revenue and profit forecasts.