The FTSE 100 finished slightly higher on Monday as investors balanced rising geopolitical tensions in the Middle East against a rebound in US equities, while fresh concerns over interest rates continued to weigh on parts of the London market.
London’s blue-chip index added 0.1% to close at 10,373.20, although gains were limited as traders monitored developments between Iran and Israel after a fresh exchange of missile strikes threatened to derail fragile peace efforts. The FTSE 250 slipped 0.2% to 23,013.43.
Oil prices initially surged as fears of a wider regional conflict intensified after Iran launched dozens of missiles at Israel overnight and Israel responded with strikes on military targets inside Iran. The flare-up marked the most serious confrontation since an uneasy truce was reached on 8 April.
Sentiment improved later in the session after Iran signalled it was ending its latest military operation, while US President Donald Trump publicly urged both sides to halt hostilities.
Brent crude remained elevated at $94.75 a barrel, up from $93.70 at Friday’s London close, though well below intraday highs near $98.
European markets struggled to follow Wall Street’s recovery, with Paris’ CAC 40 falling 0.2% and Frankfurt’s DAX losing 0.6%.
In the US, however, investors returned to technology stocks after Friday’s sharp sell-off, lifting the Nasdaq 1.5%, while the S&P 500 gained 0.8% and the Dow Jones rose 0.2%.
Friday’s market weakness was triggered by stronger-than-expected US jobs data, which prompted investors to rethink expectations for Federal Reserve policy. Hopes of interest rate cuts have faded rapidly, with markets now pricing a higher probability to another rate increase before year-end.
In London, Housebuilders remained under pressure as investors continued to price in the prospect of borrowing costs staying elevated for longer, a backdrop that could weigh on mortgage affordability and housing demand. Barratt Redrow fell 2.4%, Persimmon lost 2.5% and Berkeley Group declined 2.8%.
Tate & Lyle surged 15% after backing a takeover proposal from US ingredients group Ingredion. The cash offer of 595p per share, plus dividends, values the food ingredients maker at approximately £2.7 billion and represents one of the day’s largest gains across the London market.
Recruitment firm Hays also advanced, rising 4.2% after doubling its share buyback programme to £10 million.
Packaging and automation specialist Mpac plunged 20% after warning that full-year underlying pretax profit would come in substantially below market expectations. The company pointed to delayed customer spending decisions, pricing pressure and weaker operational leverage caused by lower volumes.
Podcast producer Audioboom also suffered heavy losses, dropping 14% after ending takeover discussions with several interested parties. Although the indicative offers received were above the company’s share price before its strategic review began, management concluded they failed to reflect Audioboom’s recent growth and future prospects following record first-quarter trading performance.