Blue chips closed lower in London on Monday as oil prices rose amid a perceived lack of progress in peace talks in the Middle East.
The FTSE 100 index closed down 38.59 points, 0.4%, at 10,862.50. The FTSE 250 ended down 110.32 points, 0.4%, at 24,744.54, while the AIM All-Share closed up 0.49 of a point, 0.1%, at 796.38.
Crude oil prices extended recent gains after Iran’s Revolutionary Guard Corps warned on Sunday that they would not reopen the Strait of Hormuz until Washington complied with demands including compensation for war damage.
Brent oil for October delivery traded higher at 86.35 US dollars a barrel on Monday, from 83.40 dollars late on Friday.
For his part, US President Donald Trump downplayed the prospect of the Strait of Hormuz reopening.
“We are low-keying it,” Axios quoted him as saying in a phone call. The US will not devote itself fully to negotiations with Iran, Mr Trump reportedly said.
“We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money,” he told the news outlet, saying that the US naval blockade of Iranian ports has worsened the situation.
“It will work out. It always works out. It’s like a chess game,” Mr Trump said of the back-and-forth with Iran, according to Axios, which quoted US officials as saying Mr Trump was focusing on de-escalation.
AJ Bell investment director Russ Mould said the Iran conflict remains a “key source of concern for markets”, with a lasting resolution seeming a distant prospect at this point.
Elsewhere, the spotlight remains on Wednesday’s US inflation figures after last week’s surprisingly soft jobs data.
Friday’s figures confounded widespread expectations for growth and suggested that the US Federal Reserve would hold off on raising borrowing costs to contain stubbornly high inflation.
Along with this week’s inflation print, the Federal Open Market Committee will receive another CPI reading and a further jobs report, before its September meeting, while the Federal Reserve’s Jackson Hole Symposium will also take place.
The pound traded at 1.3522 dollars on Monday, up from 1.3498 dollars at the equities close on Friday. Against the euro, sterling climbed to 1.1708 euro from 1.1677 euro.
The euro stood lower at 1.1549 euro against 1.1560 dollars. Against the yen, the dollar was higher at 158.92 yen, compared to 157.68 yen.
The yield on the US 10-year Treasury stretched to 4.70% on Monday from 4.65% on Friday. The yield on the US 30-year Treasury widened to 5.24% from 5.20%.
In European equities on Monday, the CAC 40 in Paris closed up 0.1%, while the DAX 40 in Frankfurt ended slightly higher.
Stocks in New York were mixed. The Dow Jones Industrial Average was slightly higher, the S&P 500 index slightly lower, and the Nasdaq Composite was down 0.3%.
JPMorgan raised its 2026 S&P 500 price target to 8,000 from 7,800.
On the earnings season so far, JPMorgan said although free cash flow is expected to remain negative in financial 2027 for most hyperscalers, demand and order coverage are improving relative to capex, as evidenced by rising backlog-to-capex and book-to-bill ratios.
“This suggests that monetisation may start ramping faster than spending, which should support stronger future revenue growth and further alleviate concerns about return on invested capital,” the broker said.
In London, corporate news flow dialled down a notch after the recent earnings blitz.
The oil price gains lifted BP and Shell by 1.4% and 0.6% respectively, while tobacco stocks were prominent fallers with British American Tobacco down 4.4%, and Imperial Brands down 4.6%.
Legal & General was in the red, down 1.6%, as Citigroup downgraded it to “sell” from “neutral”.
The broker notes with shares in the insurer up 19% year-to-date, the valuation now looks “demanding”.
A jump in bond yields put housebuilders under pressure, with Persimmon down 2.0% and Barratt Redrow 2.5% lower. On the FTSE 250, Vistry declined 12%.
Adding to Vistry’s woes, the Financial Times reported Saturday that credit insurer Allianz Trade plans to reduce the amount of cover that it provides to suppliers to the Kent-based firm.
This could result in insurance cover for Vistry suppliers being reduced by up to 70%, the FT reported, and worsen a squeeze on its cash flow.
Faring better on the FTSE 250, Plus500 was up 2.1%, after it said increases in customer and trading income helped drive 12% growth in group revenue to an all-time high.
The Haifa, Israel-based trading platform operator said pretax profit rose 0.8% to 183.2 million dollars in the six months ended June 30 from 181.8 million dollars a year earlier.
Revenue jumped 12% to 462.9 million dollars from 415.1 million dollars, a three-year record high for a six-month period.
Gold traded at 4,350.91 dollars an ounce on Friday, up from 4,349.35 dollars on Friday.
David Morrison, analyst at Trade Nation, noted: “Gold has had a decent run since the beginning of this month helped along by dollar weakness.
“The dollar sold off sharply at the end of July after the US and Japan jointly intervened to support the yen. The dollar came under further downside pressure on Friday following the release of poor US labour data.
“Given the size of the rally in gold last week, it may have to pull back and consolidate in order to build enough upside momentum for another push higher.”
The biggest risers on the FTSE 100 were Fresnillo, up 99.0p at 2,963.0p, Glencore, up 11.7p at 568.7p, Spirax Group, up 150.0p at 7,650.0p, Metlen Energy & Metals, up 0.7p at 50.7p and BP, up 7.4p at 524.6p.
The biggest fallers on the FTSE 100 were Coca-Cola HBC, down 236.0p at 4,724.0p, Imperial Brands, down 127.0p at 2,664.0p, British American Tobacco, down 193.0p at 4,228.0p, Vodafone, down 3.7p at 116.8p and Barratt Redrow, down 8.2p at 315.4p.
Tuesday’s global economic calendar has an interest rate decision in Australia overnight and trade data in Japan.
Tuesday’s UK corporate calendar has half-year results from Holiday Inn owner InterContinental Hotels Group and a trading update from housebuilder Bellway.
Contributed by Alliance News.
