FTSE 100 fell 0.3% as UK stocks and European markets dipped over Middle East war fears, with the pound plunging to $1.3323 against the dollar. Jefferies warned the conflict could last 2-3 weeks, citing missile deployment timelines and U.S./Israeli strategic goals, including securing Iran’s missile sites and Strait of Hormuz shipping lanes. Rate-cut expectations gained traction, with Jefferies dismissing front-end selloffs as overblown and favoring European/UK bond purchases ahead of potential ECB rate cuts.

Reckitt Benckiser beat forecasts with 5.4% like-for-like sales growth, driven by 14.6% emerging market demand, while Europe slipped 1.4%. Aviva hit its £2bn profit target early, reporting 25% operating profit growth to £2.2bn. Taylor Wimpey delivered 10,614 UK home completions (+6.4%), though its adjusted profit margin dipped to 10.9%. Pagegroup missed EPS estimates due to tax hikes, and Elementis sold its pharmaceutical division amid strong margins. Mixed sector performance highlighted resilience in consumer goods and chemicals.

Investors remain cautious as geopolitical risks overshadow earnings optimism. Jefferies’ rate-cut bets contrast with market pricing for 2027 hikes, creating volatility. UK homebuilders and insurers showed strength, but broader European declines underscore regional fragility. A pound rebound hinges on Middle East de-escalation and ECB policy shifts, per analyst notes.

UK investors face dual pressures: geopolitical uncertainty and divergent corporate trajectories. While energy majors and defense firms may benefit from tensions, consumer sectors face lingering inflation impacts. The Strait of Hormuz remains a critical chokepoint, with shipping disruptions amplifying global oil price risks, per Jefferies’ risk assessment.