The FTSE 100 inched higher on Tuesday, with investors balancing geopolitical uncertainty against continued momentum in global equity markets, particularly the United States where artificial intelligence-linked stocks remain a dominant force.
London’s blue-chip index closed up 0.3% at 10,373.51, while the FTSE 250 advanced 0.6% to 23,378.36. The moves were steady rather than decisive, with sentiment shaped largely by developments in the Middle East, where reports of fluctuating diplomatic engagement between Iran, Israel and regional intermediaries continued to unsettle the backdrop.
US President Donald Trump said peace discussions involving Iran were progressing quickly and suggested that Israel and Hezbollah had agreed to halt fighting, although Israeli strikes reportedly resumed on Tuesday.
At the same time, Iranian news agency Tasnim reported that Tehran had paused dialogue with mediators, citing Israel’s expanded military activity in Lebanon. Despite the lack of clear progress, investors appeared willing to maintain a cautious expectation that tensions could eventually ease.
European markets reflected a similar tone, with France’s CAC 40 closing 0.8% higher and Germany’s DAX 40 gaining 0.5%, while US indices were also firmer by the time London closed. The Dow Jones rose 0.3%, the S&P 500 added 0.2% and the Nasdaq Composite gained 0.3%, extending the momentum from Monday when US equities hit record highs.
Technology stocks remained central to the global rally. Nvidia opened higher after a strong 6% jump on Monday, fuelled by the launch of a new laptop chip designed for Windows systems.
Alphabet also drew attention after announcing plans to raise up to $80 billion to expand AI infrastructure, with Berkshire Hathaway committing $10 billion to the effort.
Meanwhile, Anthropic, the developer behind the Claude chatbot, filed confidential paperwork for a potential IPO that could value the company near $1 trillion, following similar moves from SpaceX and speculation that OpenAI may also be preparing for a listing.
Analysts warned that a surge of high-profile IPOs could test investor appetite if valuations begin to drift away from fundamentals, potentially triggering a broader reassessment in the sector.
In London, mining stocks were the standout performers. Antofagasta rose 6.5%, Anglo American gained 4.1% and Glencore added 4.6% as firmer metals prices supported the sector.
But not all FTSE 100 moves were positive. British American Tobacco fell 2.5% despite reiterating guidance for 2026 revenue growth of 3% to 5%.
The company also forecast a deeper global cigarette volume decline of 2.5%, compared with a previous estimate of 2%. Analysts highlighted pressure from weaker demand trends across key regions and increasing competition in next-generation nicotine products.
Mid-cap stocks delivered more varied performance. Elementis climbed 2.9% after announcing a €30 million share buyback funded by proceeds from the sale of its pharmaceutical manufacturing arm.
GB Group, however, dropped 16% after committing £6 million in investment aimed at long-term returns, but which is expected to weigh on near-term margins.