FTSE 100 underperforms despite Iran-Israel hope

Independent

5 hours ago

Stocks in London closed higher on Tuesday amid a fragile ceasefire between Iran and Israel, although early blue-chip gains were pegged back as oil majors and gold miners fell back.
The FTSE 100 index closed up just 0.95 points at 8,758.99. It had earlier traded as high as 8,831.90.
The FTSE 250 ended 205.25 points higher, 1.0%, at 21,326.20, and the AIM All-Share rose 3.25 points, 0.4%, at 762.54.
In European equities on Tuesday, the Cac 40 in Paris closed up 1.1%, and the Dax 40 in Frankfurt ended 1.6% higher.
US President Donald Trump said the truce between Iran and Israel was in effect a day after Tehran struck at a US base in Qatar, a move that came after US strikes on Iranian nuclear facilities.
Israel struck Iran despite a warning from Mr Trump not to retaliate against an alleged Iranian breach of a ceasefire, but said it would refrain from further attacks.
Iranian state television denied the country had violated the truce.
Israeli Prime Minister Benjamin Netanyahu's office said his forces had hit a radar station near Tehran but would not launch any more assaults after a conversation with the US president.
The ceasefire saw the oil price slump, dragging FTSE 100-listed BP and Shell down 4.8% and 3.6% respectively.
On Tuesday, Brent oil traded sharply lower at 68.08 dollars a barrel, down from 76.39 dollars on Monday. Gold was quoted lower at 3,314.07 dollars an ounce against 3,387.65 dollars.
Gold miner Endeavour Mining declined 5.8% while Fresnillo fell 2.5%.
In contrast, airlines easyJet and British Airways owner IAG both climbed 6.4% on hopes for lower fuel costs and reduced travel disruption.
On Wall Street, markets were higher at the time of the London close on Tuesday.
The Dow Jones Industrial Average was up 1.0%, the S&P 500 was 0.9% higher, and the Nasdaq Composite gained 1.3%.
Federal Reserve chairman Jerome Powell told Congress that the central bank can afford to wait for the impact of tariffs before deciding on further interest rate cuts – despite Mr Trump's calls to do so.
The Fed has a duty to prevent a spike in prices from becoming an 'ongoing inflation problem', Mr Powell told the House Committee on Financial Services.
'For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,' he added.
His reiteration that the Fed can wait to lower rates comes after two Fed officials – Christopher Waller and Michelle Bowman – recently expressed openness to cuts as early as July.
Hours before Mr Powell's testimony, Mr Trump again urged him to slash rates, saying these should be 'at least two to three points lower' given that inflation remains benign.
Worries about possible tariffs were reflected in a drop in US consumer confidence figures.
The Conference Board's consumer confidence index dropped by 5.4 points this month to 93.0, from 98.4 in May.
'Consumer confidence weakened in June, erasing almost half of May's sharp gains,' said Stephanie Guichard, a senior economist at the Conference Board.
She added that the decline was 'broad-based', with consumers' assessments of current conditions and expectations of the future contributing to the deterioration.
Mr Trump's sweeping tariffs are still at the forefront for consumers, and 'were frequently associated with concerns about their negative impacts on the economy and prices', Ms Guichard added.
The yield on the US 10-year Treasury was 4.30%, down from 4.31%. The yield on the US 30-year Treasury was 4.85%, up from 4.84%.
In the UK, Bank of England interest rate-setter Megan Greene warned that recent rises in inflation could prove longer-lasting than forecast, leaving policymakers in an 'uncomfortable place'.
In a speech at the National Institute of Economic & Social Research, Monetary Policy Committee member Megan Greene said stubborn inflation of around 3.5% for the rest of the year could keep fuelling wage rises and price hikes in the UK.
She said food prices have 'surprised consistently to the upside', adding that the Israel-Iran conflict could also push up inflation by putting pressure on oil prices.
'I worry about the near-term profile for inflation this year, which in my view now resembles more of a plateau than a hump,' she said.
The pound was quoted up at 1.3621 dollars at the time of the London equities close on Tuesday, compared with 1.3501 dollars on Monday.
Bunzl gave back strong early gains, closing up 0.2%, after backing full-year guidance.
The London-based distribution and outsourcing company said revenue is expected to be 4% higher in the six months to June 30 than the previous year, at constant exchange rates, and up to 1% higher at actual exchange rates. Revenue was £5.71 billion in the six months ending on June 30 2024.
Growth at constant exchange rates is expected to be driven by acquisitions, net of disposals, and with broadly flat underlying revenue over the period.
Peel Hunt said the statement is likely to be 'well received' after the shock warning earlier in the year.
'It looks increasingly like it was 'one and done', and the focus can now return to the long-term attractions of the compounding model.'
In April, shares in Bunzl slumped after it lowered guidance and paused its share buyback programme amid weaker-than-expected trading.
Cruise operator Carnival jumped 11% as it reported its highest-ever second quarter operating results, and said it expects to continue to take its results higher over time.
In the three months to the end of May, Carnival reported net income of 565 million dollars, multiplied from 92 million dollars a year earlier.
Revenue rose 9.5% to 6.33 billion dollars from 5.78 billion dollars.
On The Beach advanced 5.9% as RBC Capital Markets started coverage with an 'outperform' rating.
The broker believes On the Beach can continue to take market share from 'legacy tour operators' in its core beach holidays market and grow its 'city break proposition'.
The biggest risers on the FTSE 100 were JD Sports, up 4.7p at 76.5p, IAG, up 19.7p at 328.4p, easyJet, up 32.2p at 538.8p, Barclays, up 14.2p at 332.9p, and Intermediate Capital Group, up 70.0p at 1,980.0p.
The biggest fallers were Endeavour Mining, down 144.0p at 2,212.0p, BP, down 18.4p at 367.9p, BAE Systems, down 79.0p at 1,801.0p, Shell, down 99.5p at 2,584.5p, and Glencore, down 10.3p at 275.1p.