Stock markets have bounced amid hopes of a de-escalation of the Iran conflict.
The FTSE 100 index rose by more than 1.5%, even though the price of Brent crude oil has stayed above $100 a barrel.
Stronger stocks in London included BA owner IAG and Rolls-Royce, but Berkeley fell sharply after announcing it will stop buying new land.
FTSE 100 Live Wednesday
- Berkeley shifts strategy
- Topps Tiles closes stores
- Energy price cap falls
Market update: FTSE 100 up 1.6%, Berkeley shares slide 17%
10:15 , Graeme EvansRolls-Royce and BA owner IAG today drove a 1.6% surge by the FTSE 100 index as global markets bounced on hopes that an end to the war in Iran is close.
Having posted its worst monthly performance since the pandemic following a fall of 6.7% in March, London’s top flight opened the new quarter up 165.51 points to 10,341.96. It is more than 5% higher over the past week.
The improvement in risk appetite came even though the Brent Crude oil price has continued to trade above $100 a barrel and is more than 50% higher than in mid-February.
AJ Bell investment director Russ Mould said: “President Trump’s messaging that the war will be over in a couple of weeks and the clearest indication yet that Iran also wants to end the fighting are being seized on by investors.
“Eyes are likely to be glued to television screens later when Trump is set to address the American people.”
The de-escalation hopes meant government bond yields fell back from their multi-year highs seen last week, with the UK’s 10-year gilt near 4.75%.
Wall Street futures are higher after the S&P 500 index last night rose 2.9% in its best session since last May.
The FTSE 100 gains were strongest in travel-related sectors as British Airways owner IAG advanced 5% or 18.1p to 367.9p. The shares were 457p prior to the sell-off caused by Middle East flight disruption and fears of much higher jet fuel prices.
Former FTSE 100 stock easyJet rose 5% or 17.9p at 365p, while hotels group IHG put back more than 2% to stand at $133.35. A boost to the outlook for engine flying hours lifted Rolls-Royce to the top of the FTSE 100, up 6% or 72.5p to 1204.5p.
Renewed economic optimism helped Lloyds Banking Group to advance by 4p to 96.3p, while fellow lenders Barclays and NatWest improved 5% or 19.2p to 408.65p and 21.8p to 575p.
A stronger demand outlook meant copper miner Antofagasta added 6% or 204p to 3531p and Anglo American rallied 5% or 160p to 3339p.
On the fallers board, Berkeley slumped 17% or 574p 2862p after the housebuilder disclosed that it is to halt buying up land for development because of “unprecedented” increases in costs and regulation.
The stock market sell-off came despite an assurance that pre-tax profits for the year to 30 April will be in line with guidance at £450 million.
Berkeley said it will continue to target an operating margin “within its historic range of 17.5% to 19.5%” and anticipates delivering more than £1.4 billion of pre-tax profit over the next four years up to 2030.
Other housebuilders came under pressure as Barratt Redrow dropped 2.4p to 257.9p and Persimmon dipped 2p to 1066.5p.
Energy stocks BP and Shell fell by 2% as Brent Crude dropped below $100 a barrel at one point before edging up to $102.36 a barrel.
Food inflation on track for 9% - trade body
09:31 , Graeme EvansFood inflation could hit 9% by the end of 2026 as war in the Middle East risks pushing up the cost of living for British households.
The Food and Drink Federation (FDF), which represents 12,000 food and drink manufacturers, hiked its inflation forecast for the year in light of the conflict.
Economists for the trade body are now predicting that food inflation will reach at least 9% by the end of the year, up from the 3.2% that it had forecast in September last year.
Banks rally amid Middle East peace hopes, oil still near $100
09:05 , Graeme EvansThe FTSE 100 index has settled 1.4% or 142.69 points higher at 10,319.14, while benchmarks in Paris and Frankfurt have risen by 2%.
London’s best performing stocks included Rolls-Royce, which advanced 7% or 75.5p to 1207.5p, and British Airways owner IAG following a gain of 6% or 19.9p to 369.7p.
Renewed economic optimism meant Barclays improved 18.25p to 407.7p and Lloyds Banking Group added 4% or 3.8p to 96.2p.
Richard Hunter, head of markets at Interactive Investor, said: “With a mountain of cash reportedly on the sidelines, investors had been waiting for a trigger to put the money to work
“This was provided by the US President confirming a timeline of two to three weeks before the US retreats, leaving others to restore trading through the Strait of Hormuz.
“At the same time, the Iranian President was said to be open to ending the war, subject to certain guarantees.”
Brent crude oil dropped below the $100 a barrel but is still around 50% higher than in mid-February before tensions with Iran seriously ratcheted up.
Susannah Streeter, chief investment strategist at Wealth Club, said: “This signals that scepticism still remains about Trump’s claims of progress, and worries persist about how extraction from the conflict is still set to be complex.
“Even if the war ends in weeks, the damage wreaked to energy facilities in the region will take years to repair. Iran is also now flexing more control over the Strait of Hormuz, planning tolls on ships, so freight costs will rise even as it reopens.”
Topps Tiles announces store closures
08:29 , Graeme EvansRetailer Topps Tiles has announced 23 stores are being closed in the face of a tougher home improvement market and rising costs.
The Leicestershire-based tile chain said the closures - 7% of its 319-strong estate - will help slash costs as part of “significant self-help measures”, which also include savings being made at its head office.
Topps said the stores are under-performing, with eight already closed since last September and the remainder being shut over the next six months. It did not disclose what impact the moves would have on its workforce.
The group said sales fell 0.1% to £142.7 million in the six months to March 28. Shares fell 1.6p to 33p today.
Berkeley shifts strategy on land buying, shares fall
08:25 , Graeme EvansThe shares of Berkeley Group today fell 7% after the housebuilder said it will stop buying new land and reduce investment in building work.
The company, which specialises in building homes in urban areas, especially London, said the decision comes in the context of recent global events.
Berkeley had said earlier in March that the Iran war was “weighing heavily on risk sentiment” and that it was mindful of the potential for higher inflation this year, and for interest rates to stay elevated for longer.
The risk of this slowing the market recovery “has now become a reality”, while it also flagged an “unprecedented” increase in costs and regulation over recent years.
In this context, Berkeley said it “does not believe it can make its required rate of return on investment in new land acquisitions”.
FTSE 100 jumps, Rolls and IAG shares surge
08:13 , Graeme EvansThe FTSE 100 index today jumped by 1.8% or 182.64 points to 10,359.09.
The shares of lenders Barclays and NatWest rose 5% and 3.5% respectively, while Rolls-Royce surged 8% and British Airways owner IAG lifted 6%.
Their gains came as hopes for a de-escalation of the Middle East conflict helped to lower the Brent Crude oil price by 4% to just below $100 a barrel.
London–focused housebuilder Berkeley fell 7% or 246p to 3190p after it said that it would stop buying new land in response to the challenging industry conditions.
Wall Street set for fresh gains, Vix index falls back
07:55 , Graeme EvansHopes for a de-escalation of the Middle East conflict today sparked a rebound for Asia markets, with the Nikkei 225 up by more than 5%.
The gains follow Wall Street’s strongest session since last May as the S&P 500 index jumped 2.9%, led by an advance for tech stocks including Nvidia.
IG said the improvement was accompanied by a shift in US interest rate expectations, with futures now pricing a 32% chance of July cut.
Meanwhile, the VIX index of volatility last night registered its biggest daily decline since last April.
IG futures point to another strong Wall Street session later today, while the FTSE 100 index is seen about 150 points higher.
Household energy bills drop ahead of July spike
07:36 , Graeme EvansHousehold energy prices today fell by 7% in a “short-lived respite” before a predicted 18% hike from July.
Ofgem’s price cap today dropped from £1,758 to £1,641 – a reduction of £117 or around £10 a month for the average household using both electricity and gas.
This is an 11% fall year on year, but still £600 more than bills were in the winter of 2020 to 2021.
The latest predictions from Cornwall Insight suggest that the Middle East conflict could cause a rise of 18% or £288 a year in July’s price cap.
FTSE 100 seen 1% higher, Brent Crude at $104
07:02 , Graeme EvansThe FTSE 100 index is set for a strong start to the new quarter, with IG future pointing to a rise of 1% at today’s opening bell.
The advance follows a 2.9% surge for the S&P 500 index, while the Nasdaq Composite jumped 3.8% and the Dow Jones Industrial Average advanced 2.5%.
Hopes for an imminent end to the Middle East war also boosted Asia markets as the Nikkei 225 jumped by more than 4.5% and the Hang Seng index up 2.1%.
The FTSE 100 index last night closed 0.5% or 48.49 points higher at 10,176.45, while the FTSE 250 improved 1.2%.
London’s top flight fell by more than 6% in March after the price of Brent Crude registered its biggest monthly rise on record. The oil benchmark this morning traded slightly higher at $104.33 a barrel.
