Stocks up on hopes of thaw to Middle East tension

Independent

8 hours ago

The FTSE 100 ended higher on Monday, just shy of a record closing high, on reports Iran is willing to resume nuclear talks with the US.
The FTSE 100 index closed up 24.59 points, 0.3%, at 8,875.22, just shy of its record closing peak of 8,884.92 posted last Thursday and the all-time high of 8,908.82, recorded in March.
The FTSE 250 ended 110.69 points higher, 0.5%, at 21,284.02, and the AIM All-Share rose 2.71 points, 0.4%, at 764.14.
In European equities on Monday, the CAC 40 in Paris closed down 0.8%, as did the DAX 40 in Frankfurt.
Stocks in New York were higher at the time of the London close. The Dow Jones Industrial Average was up 0.9%, the S&P 500 index was 1.1% higher, and the Nasdaq Composite climbed 1.5%.
'Despite a weekend of violence between (Israel and Iran), investors showed no signs of panicking,' observed Russ Mould at AJ Bell.
The conflict between Israel and Iran has entered its fourth day as Israel's military warned that it had detected a new missile threat, saying its defensive systems were working.
The two countries have been exchanging fire since the Israeli military began striking military and nuclear targets in Iran on Friday.
But a report in the Wall Street Journal offered some hope.
It said Tehran is signalling it wants to de-escalate hostilities with Israel and is willing to resume nuclear talks with the US as long as Washington does not join the Israeli attacks.
A similar report by Reuters said Iran conveyed the message through Qatar, Saudi Arabia and Oman.
The price of Brent oil gave back some of Friday's heavy gains, trading lower at 72.79 dollars a barrel late on Monday from 73.61 dollars on Friday.
Despite the calmer mood, Mr Mould cautioned: 'The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further.'
The pound was quoted slightly higher at 1.3594 dollars at the time of the London equities close on Monday, compared to 1.3591 dollars on Friday.
The euro stood higher at 1.1591 dollars against 1.1560 dollars Against the yen, the dollar was trading at 144.09 yen, up compared to 144.01 yen.
The yield on the US 10-year Treasury was quoted at 4.43%, widened from 4.42%. The yield on the US 30-year Treasury was quoted at 4.92%, stretching from 4.90%.
This week sees interest rate decisions in the US, UK, Japan, Switzerland, Sweden and Norway.
The Federal Reserve, Bank of Japan and Bank of England are all expected to leave interest rates unchanged.
Bank of America thinks the Fed's main message on Wednesday at the June meeting will be that it remains 'comfortably in wait-and-see mode'.
BofA expects the summary of economic projections to show just one cut this year and 75 basis points in 2026.
'For 2025, we think growth will likely be marked down and inflation will likely be revised up. Given elevated uncertainty, we don't expect forecast changes for 2026 and beyond,' the broker adds.
'Investors should focus on Powell's take on the softening labour data, the recent benign inflation prints and the risks of persistent tariff-driven inflation.'
In the UK, the BoE's Monetary Policy Committee is also likely to leave rates on hold despite recent weak economic figures.
'Soft data flow will likely not be enough to tip the majority of the MPC to a cut at this meeting, but should allow for three dissenters and a change in tone around the balance of risks,' Barclays said.
The broker pencils in a 6-3 vote in favour of the status quo with arch-dove Swati Dhingra, Alan Taylor and BoE Deputy Governor Dave Ramsden preferring a 25bps cut.
Deutsche, ING and BofA look for a 7-2 vote split but do not rule out a more dovish rate make-up.
Deutsche expects the MPC to 'open the door' to an August rate cut.
On the FTSE 100, Entain jumped 15% after BetMGM, its US joint-venture, said earnings for the full-year are now expected to be stronger than previously forecast.
BetMGM is expected to achieve earnings before interest, tax, depreciation, and amortisation of at least 100 million dollars in 2025, the Ladbrokes owner said.
Net revenue of at least 2.6 billion dollars is now expected. BetMGM's net revenue in 2024 amounted to 2.10 billion dollars It suffered an Ebitda loss of 244 million dollars.
The gambling firm noted the previous guidance was for BetMGM to be 'Ebitda positive' this year, and for it to achieve revenue between 2.4 billion dollars and 2.5 billion dollars.
Irish broker Davy had forecast an Ebitda of 12 million dollars.
'This is an encouraging update, particularly in the context of more visibility of an inflection into profitability,' Davy said.
'Speaking to the company, it noted that the better performance has been driven by a wide range of product improvements and that this has also facilitated more efficient generosity spend.
'The strong net revenue growth has been due to both iGaming and online sports, which has been driven by handle growth. The company clarified that this is not win margin-driven.'
M&G gained 2.0% as Barclays upgraded to 'overweight' from 'equal weight' while Aviva ended flat as the broker moved the insurer the other way.
'In our view, M&G's growth potential is not reflected in its current share price, while Aviva's share price exceeds our price target that includes the potential impact of Direct Line' Barclays said in a research note.
Costain rose 7.3% as it announced a £10 million share buyback after reporting its defined benefit-pension scheme was in surplus for the second consecutive year.
The first £5 million tranche will be run by Investec and the second by Panmure Liberum.
The first tranche will commence immediately, with the second tranche anticipated to end no later than December 23 2025.
Gold was quoted lower at 3,403.81 dollars an ounce against 3,427.50 dollars.
The biggest risers on the FTSE 100 were Entain, up 114.6 pence at 866p, IAG, up 10.6p at 327.3p, Informa, up 23.6p at 799.8p, Standard Chartered, up 34.5p at 1,180.0p, and Ashtead, up 115.0p at 4,382.0p.
The biggest fallers on the FTSE 100 were Endeavour Mining, down 78.0p at 2,322.0p, Diageo, down 44.0p at 1,906.0p, Fresnillo, down 28.0p at 1,417.0p, GSK, down 26.0p at 1,485.5p, and AstraZeneca, down 168.0p at 10,818.0p.
Tuesday's global economic calendar has the Bank of Japan interest rate decision overnight, US retail sales, export and import prices and industrial production figures.
The domestic corporate calendar on Tuesday sees full-year results from industrial equipment hire firm, Ashtead and a trading statement from outsourcer Capita.