Stocks falter but avoid sell-off after US strikes on Iranian nuclear sites
London's FTSE closed down on Monday as traders awaited Tehran's response to US strikes on Iranian nuclear facilities over the weekend.
The FTSE 100 index closed down 16.61 points, 0.2%, at 8,758.04. The FTSE 250 ended 27.55 points lower, 0.1%, at 21,120.95, but the AIM All-Share rose just 0.15 of a point at 759.29.
In European equities on Monday, the CAC 40 in Paris closed down 0.7%, and the DAX 40 in Frankfurt ended 0.3% lower.
'The markets are not yet reacting with any degree of panic to the US air strike on Iran's nuclear facilities as they await to see how Tehran responds,' said Russ Mould, at AJ Bell.
Israel said it struck 'regime targets' in the city, escalating tensions a day after US air strikes on Iran's nuclear facilities. Iran, in turn, fired missile barrages at Israel and vowed retaliation against the US, as both sides intensified attacks on the war's 11th day.
But fears of a further sharp spike in the oil price were not realised, although the outlook remains uncertain.
Stephen Innes, at SPI Asset Management, said: 'Everything hinges on Iran's response – and whether it's a symbolic jab or a haymaker that knocks the Strait of Hormuz offline. That narrow bottleneck, through which 20% of global oil flows, has morphed from geographic trivia to a live wire pulsing beneath the entire financial complex.'
He added: 'If Hormuz does shut – even for a week – the 100 dollars per barrel oil scenarios that everyone's scribbled in the margins go front and centre.'
On Monday, Brent oil traded lower at 76.39 dollars a barrel, down from 76.49 dollars on Friday.
Safe haven gold was quoted higher at 3,387.65 dollars an ounce against 3,366.36 dollars. Gold miners Endeavour Mining and Fresnillo climbed 2.9% and 2.6% respectively.
Goldman Sachs said: 'Aside from energy supply disruptions and price increases, spillovers from the Iran-Israel war should be limited, since most countries have very limited trade exposure (outside of energy products) to Iran, Israel or the Middle East more broadly.'
On Wall Street, markets were higher at the time of the London close on Monday as another Federal Reserve official put the case for an interest rate cut at the July meeting.
The Dow Jones Industrial Average was up 0.2%, the S&P 500 was 0.4% higher, and the Nasdaq Composite gained 0.5%.
A key US central bank official called for an interest rate cut as early as July if inflation effects from President Donald Trump's sweeping tariffs remain limited.
The comments by Federal Reserve vice chair for supervision Michelle Bowman came days after Fed governor Christopher Waller said the bank could lower rates as soon as next month – amid differences among officials on how they should respond to levies.
'Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labour market,' Ms Bowman said in prepared remarks for a conference in Prague.
In its policy meeting last week, the Fed held its benchmark lending rate at a range between 4.25% and 4.50%, keeping it unchanged so far this year.
The comments saw bond yields drop. The yield on the US 10-year Treasury was quoted at 4.31%, narrowed from 4.40%. The yield on the US 30-year Treasury was quoted at 4.84%, slimmed from 4.91%.
The pound was quoted up at 1.3501 dollars at the time of the London equities close on Monday, compared with 1.3467 dollars on Friday. The euro stood higher at 1.1545 dollars against 1.1521 dollars. Against the yen, the dollar was trading at 146.37 yen, up compared with 145.89 yen.
In the UK, economic activity picked up in June.
The flash UK composite purchasing managers index (PMI) rose to a three-month high of 50.7 points in June, from May's final tally of 50.3, S&P Global said.
The services flash PMI rose to a three-month high of 51.3 in June, from 50.9 in May. The manufacturing PMI spiked to a five-month high of 47.7, though staying in negative territory, from 46.4 in May.
Elliott Jordan-Doak, at Pantheon Macroeconomics, said the PMI suggests that business confidence is staging a 'fragile recovery after being battered by tariff threats and tax increases. That said, rising geopolitical stress is likely to be added to the growing list of worries facing businesses'.
Elsewhere, Spectris surged 16%. It agreed to a buyout from private equity firm Advent International, although a rival bid could emerge from Kohlberg Kravis Roberts (KKR).
Advent will pay £37.63 in cash per Spectris share for the provider of high-tech instruments, test equipment and software, an offer consideration that includes a 28 pence dividend. The bid values the entire issued and to be issued share capital of Spectris at around £3.8 billion. It implies an enterprise value of £4.4 billion.
However, a rival bidder could yet emerge after KKR, the New York-based private equity firm, said it continues to engage 'constructively' with Spectris, although it added there 'can be no certainty' that any firm offer will be made.
KKR, meanwhile, was thwarted in its consortium's effort to acquire Assura. Assura recommended the new cash-share offer from peer Primary Health Properties, describing it as 'fair and reasonable'.
Under the terms of the increased Primary Health Properties offer, Assura shareholders would receive 0.3865 new Primary Health Properties shares and 12.5 pence in cash.
In addition, Assura shareholders would be entitled to receive a special dividend of 0.84p per Assura share.
Based on the Primary Health Properties closing share price of 103.5p on Friday last week, the fresh Primary Health Properties offer implies a total value to be received by Assura shareholders of 53.3p for each Assura share.
This represents a premium of 5.8% to the value of the best and final cash offer of 50.42p per Assura share, made by Sana Bidco, a consortium made up of KKR and property investor Stonepeak Partners.
Assura shares fell 0.2%. Primary Health fell 4.2%.
One Health Group shot up 11%. It reported strong growth in annual sales and profit as it delivered more surgical procedures to NHS patients.
Pre-tax profit rose 36% to £1.5 million in the financial year that ended March 31 from £1.1 million the year prior, as revenue climbed 23% to £28.4 million from £23.0 million.
Chief executive Adam Binns said: 'We have delivered a strong performance in all our three drivers of growth; more patients, more operating theatre capacity and a record number of new surgeons applying to provide their services to the group.'
The biggest risers on the FTSE 100 were Endeavour Mining, up 70.00 pence at 2,356.00p, National Grid, up 28.00p at 1,077.00p, Fresnillo, up 36.00p, at 1,443.00p, ConvaTec, up 6.80p at 289.80p, and Bunzl, up 48.00p at 2,320.00p.
The biggest fallers on the FTSE 100 were NatWest, down 12.30p at 494.30p, Mondi, down 29.00p at 1,170.00p, easyJet, down 12.40p at 506.60p, Marks & Spencer, down 7.90p at 354.00p, and AB Foods, down 44.00p at 2,033p.
Tuesday's global economic calendar has US consumer confidence data and house price figures.
Tuesday's local corporate calendar has half-year results from cruise operator Carnival and a trading statement from distribution and outsourcing company Bunzl.
Contributed by Alliance News.
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