Early market roundup: European stocks jump amid US-Iran deal hopes

Stock prices in London, Paris and Frankfurt were sharply higher on Friday morning after comments from US President Donald Trump that a deal between the US and Iran could soon be signed, with finer points of arrangement approved by the US and its allies.

The FTSE 100 index opened up 138.31 points, 1.3%, at 10,442.19. The FTSE 250 was up 386.90 points, 1.7%, at 23,357.54, and the AIM all-share was up 12.81 points, 1.7%, at 783.77.

The Cboe UK 100 was up 1.3% at 1,036.87, the Cboe UK 250 was up 1.7% at 20,104.27, and the Cboe small companies was down 0.1% at 18,666.43.

In European equities on Friday, the CAC 40 in Paris was up 2.1%, while the DAX 40 in Frankfurt was 1.5% higher.

Sterling was at $1.3400 on Friday morning, up from $1.3342 at the London equities close on Thursday. Against the euro, sterling rose slightly to €1.1579 from €1.1578.

The euro was higher at $1.1567 from $1.1522. Against the yen, the dollar fell to JP¥160.26 from JP¥160.48.

Tehran said it had not reached a final decision on a deal to end the Middle East war, despite US President Donald Trump claiming an agreement could be signed in days and cancelling threatened strikes on Iran.

Claiming that talks with Iran had been ‘brought to the highest level of Iranian leadership and approved,’ Trump said he had ‘cancelled the scheduled strikes and bombings against Iran this evening.’

‘Time and place of the signing to be announced shortly,’ he added.

Trump said the finer points of the arrangement had been approved by the US and its allies in the region, including Israel, with which Washington jointly launched the war in February.

In response, Brent crude was trading lower at $87.18 a barrel on Friday morning from $92.95 on Thursday. Oil majors BP and Shell fell 3.5% and 2.6% respectively.

Airlines were among the stocks to climb in London. IAG led the FTSE 100 and jumped 6.1%, while Wizz Air was 6.4% higher on the FTSE 250 index.

However, Iran’s foreign ministry spokesman Esmaeil Baqaei said Tehran ‘had not reached a final conclusion on the agreement’.

He added that ‘most of the text of the agreement was finalized, but the problem began when the US side made new demands and changed its positions.’

The Tasnim news agency noted that Trump had announced a deal was imminent 38 times in the previous two months.

Later Trump doubled down, telling reporters ‘I understand the answer is yes,’ when asked if Iranian supreme leader Ayatollah Mojtaba Khamenei had approved the deal.

Meanwhile, the UK economy contracted 0.1% in April, in line with forecasts, according to data from the Office for National Statistics.

Monthly gross domestic product contracted by 0.1% in April, following growth of 0.3% in March and 0.4% in February. This was in line with the FXStreet-cited consensus.

This fall was driven by a 0.2% fall in services, which was partially offset by a 0.1% rise in construction. Production showed no growth.

Over the three months to April, real GDP grew by 0.7% compared with the three months to January. This follows 0.6% growth in the period to March and a 0.5% rise in the three months to February.

Deutsche Bank economist Sanjay Raja said: ‘Today’s GDP data confirmed what we were all expecting: a slight contraction to start the second quarter. After a super strong start to the year, some course correction was inevitable. Moreover, as the Iran conflict unfolds, it’s clear that the energy shock is starting to catch up with households and businesses.

‘Looking ahead, we continue to see a little more sluggish activity on the way. While May could bring some temporary reprieve (given the warmer weather), we think that activity will continue to slow as real incomes get squeezed by higher energy prices and higher market rates start to eat further into household budgets.’

In Asia on Friday, the Nikkei 225 in Tokyo was up 2.8%. In China, the Shanghai Composite was 1.2% higher, while the Hang Seng Index in Hong Kong gained 1.7%. The S&P/ASX 200 in Sydney advanced 2.0%.

In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.9%, while the S&P 500 gained 1.8% while the Nasdaq Composite surged 2.5%.

The yield on the US 10-year Treasury was quoted at 4.45% on Friday morning, narrowed from 4.52% on Thursday. The yield on the US 30-year Treasury slimmed to 4.95% from 5.00%.

Back in London, Rolls-Royce was up 5.2% on the FTSE 100 index after Berenberg raised its rating on the stock to ’buy’ from ’hold’. The price target was increased to 1,430 pence from 1,270p.

On the FTSE 250 index, shares in Kier were up 3.8% after it secured a £140 million extension to its role on the Network Services Alliance.

The Manchester, England-based infrastructure services, construction and property investment firm said the framework extension runs until March 2028, with Kier the solar contractor appointed. It means Kier will ‘continue delivering vital maintenance and improvements across South West Water’s network’.

On the AIM market, MedPal AI surged 37% after it said the UK approval of Novo Nordisk’s Wegovy pill is ‘directly relevant’ to its weight management clinic, New Health.

The London-based digital health and AI company said the tablet is not currently available on the NHS, meaning private provision is the only route to access.

The company said it believes its vertically integrated model positions New Health to respond to anticipated patient demand in the UK.

‘This approval has arrived faster than the market expected, and the timing for New Health could hardly be better... New Health was built for exactly this moment: clinician-led, technology-enabled, and ready to make this treatment available safely and at scale as we take our national campaign live,’ said MedPal AI Chief Executive Officer Jason Drummond.

Among small caps, shares in BSF Enterprise sank 38%.

The London-based biotechnology investment group, which focuses on lab-grown meat and leather said its T-Rex leather handbag failed to achieve its reserve price at an auction in Paris.

The firm said bidding for the ‘unique, museum-grade luxury handbag’ topped out at €150,000.

As a result, the handbag has been withdrawn from auction and is being prepared for sale to a high-net-worth buyer.

Gold was higher at $4,199.60 an ounce early on Friday from $4,079.75 late Thursday.

Still to come on Friday’s economic calendar is a reading from the US Michigan consumer sentiment index, plus Canadian manufacturing sales data.

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