The FTSE 100 finished the week with a strong advance as renewed optimism over a possible US-Iran agreement lifted sentiment, while investors also turned their attention to the blockbuster stock market debut of SpaceX.
London’s blue-chip index closed 1.6% higher at 10,471.72, matching gains in the FTSE 250, which ended the session at 23,325.71.
The rally gathered pace after signs emerged that negotiations between Washington and Tehran may be approaching a breakthrough, reversing concerns that had resurfaced earlier in the week.
Late on Thursday, US President Donald Trump said he had cancelled planned military strikes against Iran and claimed an agreement had been reached. He added that Iran’s Supreme Leader had approved the text and said details surrounding a formal signing would be announced shortly.
Those comments were followed on Friday by remarks from Iranian Foreign Minister Abbas Araghchi, who said the two sides had “never been closer” to a deal. Referring to the Islamabad Memorandum of Understanding, Araghchi urged media outlets to avoid speculation after reports about the contents of the agreement appeared in Iranian publications and were later criticised by Trump.
According to White House officials, Iran has agreed to dismantle its nuclear programme and destroy nuclear materials under the proposed deal. Tehran has also reportedly agreed to reopen the Strait of Hormuz, while access to frozen funds will remain conditional on compliance with its commitments.
The prospect of easing tensions across the Middle East triggered a sharp decline in oil prices. Brent crude fell to $87.00 a barrel, down from $92.95 at Thursday’s London equities close, putting pressure on energy stocks.
BP slipped 2.0% and Shell lost 1.7%, making both notable laggards despite the wider market rally. Shell also confirmed a temporary pause to its $3 billion share buyback programme until mid-July because of securities law requirements linked to its acquisition of ARC Resources.
Elsewhere, lower oil prices provided support for sectors that benefit from reduced fuel costs. British Airways owner International Consolidated Airlines surged 7.1% as investors looked ahead to cheaper operating expenses and stronger travel demand.
Mining shares also enjoyed a strong session as metals prices strengthened. Antofagasta gained 4.9%, Anglo American rose 5.2% and Fresnillo added 4.5%.
Rolls-Royce climbed 4.4%, supported by hopes that a reduction in geopolitical tensions could benefit global economic activity, while an analyst upgrade from Berenberg added further momentum.
Across the Atlantic, attention centred on the long-awaited flotation of SpaceX. Elon Musk’s rocket company raised $75 billion through the largest initial public offering ever seen, selling 555.6 million shares at $135 each and securing a valuation of approximately $1.77 trillion.
Trading began strongly, with shares changing hands at around $163 by the time London markets closed, representing a sizeable premium to the offer price. The successful launch instantly positioned SpaceX among the most valuable listed companies in the United States, overtaking Tesla in market value.
The excitement also spilled over into UK markets. Scottish Mortgage Investment Trust, a shareholder in SpaceX, rose 1.7% as investors adjusted valuations to reflect the company’s public market debut.
European markets joined the rally, with both Paris’s CAC 40 and Frankfurt’s DAX 40 ending the day 1.8% higher.
Economic data offered a reminder that challenges remain closer to home after figures from the Office for National Statistics showed the UK economy contracted by 0.1% in April. The decline was in line with forecasts and largely overshadowed by developments in the Middle East and one of the most closely watched stock market debuts in recent history.