Early market roundup: Shares fall amid fresh US-Iran strikes; oil up

Stock prices in London opened lower on Monday as the price of Brent oil edged higher as the US and Iran exchanged new strikes, while a handful of manufacturing purchasing managers’ index data was released.

The FTSE 100 index opened down 28.73 points, 0.3%, at 10,380.55. The FTSE 250 was down 25.83 points, 0.1%, at 23,399.29, and the AIM all-share was down 0.31 points, marginally lower, at 820.94.

The Cboe UK 100 was down 0.3% at 1,032.22, the Cboe UK 250 was down 0.6% at 20,180.57, and the Cboe small companies was down 0.1% at 18,781.23.

In European equities on Monday, the CAC 40 in Paris was marginally higher, while the DAX 40 in Frankfurt was marginally lower.

Geopolitical tensions remained front and centre. The US and Iran exchanged fresh strikes over the weekend in the latest test of the fragile ceasefire and ongoing negotiations to end the war.

Despite the truce, the US confirmed it struck Iran again in response to what it described as ‘aggressive Iranian actions’, while Iran’s Revolutionary Guard targeted an airbase in retaliation.

Although previous exchanges have not escalated into all-out war, the renewed attacks have raised doubts over the durability of diplomatic efforts.

Over the weekend, US President Donald Trump convened in the Situation Room to make what he described as a ‘final determination’ on the Iran conflict. He later claimed that Democrats and ‘unpatriotic Republicans’ were undermining his negotiating position, reiterating that Iran ‘really wants to make a deal’.

Prior to the latest flare-up, Washington and Tehran had appeared to be edging towards a preliminary framework. A reported deal would reopen the Strait of Hormuz and end the US naval blockade as part of a 60-day ceasefire extension, while giving both sides more time to address more contentious issues such as Iran’s nuclear programme and US sanctions.

Brent oil was trading at $94.00 a barrel early Monday, higher than $91.62 late Friday, supporting energy stocks.

Sterling was quoted at $1.3462 early Monday, slightly lower than $1.3479 at the London equities close on Friday. Against the euro, sterling rose to €1.1548 from €1.1543. The euro traded at $1.1657, down from $1.1680.

The S&P Global eurozone manufacturing purchasing managers’ index fell to 51.6 points in May from 52.2 points in April, but beating the flash reading of 51.4 points. Falling towards the neutral 50-point mark separating growth from contraction, it indicates manufacturing activity growth in the eurozone slowed in May.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: ‘Although euro area manufacturers reported an expansion for a fourth successive month in May, the sector is showing signs of struggling under the weight of rising prices and supply disruptions emanating from the war in the Middle East.’

Against the yen, the dollar was quoted at JP¥159.47, up versus JP¥159.15.

Back in the UK, data from Nationwide Building Society showed that annual house price growth slowed to 1.7% in May from 3.0% in April.

House prices fell 0.6% month-on-month, reversing a 0.4% increase and marking the first monthly decline of 2026. The average UK house price slipped to £278,024 from £278,880.

Chief Economist Robert Gardner said housing market momentum had weakened amid uncertainty caused by the Middle East conflict, which has pushed up energy prices and market interest rates.

However, he added that housing affordability has improved in recent years as income growth has outpaced house price gains and mortgage rates remain below their 2023 highs, suggesting any near-term slowdown could prove temporary if energy prices and market conditions stabilise.

On the FTSE 100, energy stocks were among the biggest positive contributors, buoyed by firmer oil prices. Shell rose 1.2% and BP gained 0.8%.

These gains were partly offset by weakness in miners as metal prices slipped. Fresnillo was the biggest loser, down 3.0%, followed by Endeavour Mining, down 2.8%.

Defence stocks were also under pressure, with Babcock down 2.9% and BAE Systems off 2.4%.

On the FTSE 250, easyJet jumped 12% after saying it has not been approached by or held discussions with Castlelake LP, following the investor’s disclosure that it is considering a possible takeover offer. Castlelake said it holds a 2.14% stake in easyJet and, under UK takeover rules, any offer would need to be at no less than 403.23 pence per share. It must announce a firm intention to make an offer or walk away by June 26.

easyJet described the timing of the announcement as ‘highly opportunistic’, arguing that its share price has been temporarily depressed by the Middle East conflict and higher jet fuel prices. The airline noted that before the Iran conflict erupted on February 28, its shares had closed at 464.00p on February 27.

Bluefield Solar Income Fund surged 16% after Drax Group, up 0.6%, agreed to buy the fund in a $755 million deal.

Also in the FTSE 250, Applied Nutrition climbed 12% after raising guidance, announcing a US acquisition and unveiling a licensing deal.

At the bottom of the index, Me Group International tumbled 21% after saying trading softened in April, particularly in its French photobooth and laundry businesses. The company attributed the weakness to lower consumer confidence and changing spending patterns linked to the ongoing Middle East conflict.

While trading improved in May, it does not expect conditions to normalise while the conflict and broader macroeconomic uncertainty persist. It now expects full-year pretax profit of £69 million to £74 million.

Among smaller caps, Proteome Sciences jumped 31% after saying Chief Scientific Officer Ian Pike stepped down on Sunday last week.

RentGuarantor Holdings rose 16% after reporting revenue of around £2 million in the first five months of 2026, compared with £780,000 a year earlier, and said it expects stronger trading momentum to continue through the second half.

In Asia on Monday, the Nikkei 225 in Tokyo closed 0.9% higher. The Shanghai Composite fell 0.3%, while the Hang Seng in Hong Kong rose 0.8%. The S&P/ASX 200 in Sydney closed marginally lower.

In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.7%, while the S&P 500 and Nasdaq Composite each rose 0.2%.

The yield on the US 10-year Treasury was quoted at 4.47%, widening from 4.43%. The yield on the US 30-year Treasury was quoted at 4.99%, widening from 4.97%.

Gold was quoted at $4,496.50 an ounce early Monday, lower than $4,584.74 on Friday.

Still to come on Monday’s economic calendar is a raft of manufacturing PMI readings from Spain, Switzerland, France, Germany, the eurozone, the UK, Canada and the US. Eurozone unemployment data and the US ISM manufacturing PMI are also scheduled.

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