Late market roundup: FTSE 100 inches higher amid US-Iran optimism

London’s blue chip index ended Wednesday in the green, posting a modest gain, as retailers and housebuilders supported the index while oil majors dragged as fresh Middle East peace hopes hit the oil price.

The FTSE 100 closed up 13.62 points, 0.1%, at 10,505.01. The FTSE 250 ended up 57.49 points, 0.3%, at 23,384.98, and the AIM All-Share rose 1.13 points, 0.1%, at 813.59.

The Cboe UK 100 ended up slightly at 1,044.82, the Cboe UK 250 was up 0.2% at 20,280.27, and the Cboe Small Companies Index ended up 0.2% at 18,835.07.

Oil prices eased markedly as investors eyed signs that the US and Iran were closing in on a deal that would open up the Strait of Hormuz and avoid a resumption of the Middle East war.

However, the White House on Wednesday blasted an Iranian state television report about a framework deal with the US to end the Middle East war as a ‘complete fabrication.’

Iranian state television said on Wednesday a draft framework deal with the US included a commitment to lift the naval blockade on Iran, restore traffic through the Strait of Hormuz and the US to withdraw its forces from the Gulf region.

The report cited what it described as a draft outline of a potential memorandum of understanding, while noting that the text was ‘still not finalised’.

‘This report from Iranian controlled media is not true and the MOU they ’released’ is a complete fabrication. Nobody should believe what Iranian state media is putting out. FACTS MATTER,’ the White House said on X.

Earlier Wednesday, Iran’s Revolutionary Guards said that a return to war with the US was unlikely, while the restoration of internet services by the Iranian authorities on Tuesday after a three-month shutdown was also taken as a positive sign that tensions were easing.

Brent crude for July delivery traded lower at $96.61 a barrel on Wednesday, down from $100.18 at the time of the equities close in London on Tuesday.

‘The hope will be that this is finally the week when a real breakthrough is achieved, but should negotiations fail then we could see market patience wear thin,’ said AJ Bell investment director Russ Mould.

He cautioned, however, that ‘Even if an agreement is reached, it will take time to get energy infrastructure fully back online and shipments flowing through the Strait of Hormuz at anywhere near pre-war levels.’

On the FTSE 100, the oil price fall hit BP, down 2.7%, and Shell, down 2.3%. But on the plus side, British Airways owner International Consolidated Airlines gained 3.1%, retailers JD Sports Fashion and Marks & Spencer rose 5.1% and 4.3%, while housebuilder Barratt Redrow gained 2.3% as bond yields cooled.

‘The UK 10-year yield is lower by 4bps today and is down by a whopping 34bps since the 10-year yield peaked on 18th May at 5.17%. There is a clear link between the oil price and UK yields, so when the price of oil dips it drags the yield lower with it,’ noted Kathleen Brooks, research director at XTB.

In European equity markets on Wednesday, the CAC 40 in Paris ended up 0.4%, and the DAX 40 in Frankfurt closed down slightly.

In New York, the Dow Jones Industrial Average was up 0.4%, the S&P 500 was 0.1% lower, and the Nasdaq Composite eased 0.3%.

The pound traded at $1.3429 on Wednesday afternoon, down from $1.3443 on Tuesday. Against the euro, sterling eased to €1.1543 from €1.1567 on Tuesday.

The yield on the US 10-year Treasury narrowed to 4.47% on Wednesday from 4.51% on Tuesday. The yield on the US 30-year Treasury ebbed to 5.00% from 5.03%.

The euro traded higher against the greenback, at $1.1633 on Wednesday against $1.1622 on Tuesday. Against the yen, the dollar was trading at JP¥159.46, higher than JP¥159.33.

Gold traded at $4,439.66 an ounce on Wednesday, down from $4,504.21 on Tuesday.

David Morrison, senior market analyst at Trade Nation noted gold has ‘struggled’ over the past fortnight as the US dollar has strengthened and as Treasury yields surged higher on inflationary fears, and speculation of rate hikes this year from the US Federal Reserve.

‘It’s difficult to see what will happen next. If there were to be an end to the war between the US and Iran, then that would suggest that the US dollar may face some selling pressure (as traders exit their ’flight to quality’ trade) which should boost gold. On the other hand, gold may need to retest support around $4,400 before it does anything significant.’

Back in London, the FTSE 250 saw big moves for Hollywood Bowl, up 15%, and Pets at Home, up 6.5%.

Hemel Hempstead, England-based ten-pin bowling operator Hollywood Bowl raised its half-year dividend by 10% to 4.52p per share from 4.10p and announced a £5 million share buyback programme in the second half of the financial year.

‘This reflects our confidence in the ongoing strength of the business and our commitment to delivering attractive returns for shareholders,’ it added.

Revenue grew 9.5% to £141.5 million from £129.2 million with like-for-like growth of 2.3%, speeding up from 1.6% a year ago.

Shore Capital analysts said the half-year outturn was ‘solid’, especially when set against the ‘challenging’ UK consumer backdrop and tough comparatives.

Meanwhile, Pets at Home prospered as Chief Executive Officer James Bailey said the Cheshire-based operator of pet stores and veterinary practices has made ‘material progress’ in stabilising the retail operation over the past six months.

Analysts at Peel Hunt said there were ‘green shoots’ in the retail business, with like-for-like sales steadily improving and current trading now running at a mid-single-digit percentage growth rate.

The biggest risers on the FTSE 100 were JD Sports Fashion, up 4.14p at 85.42p, Marks & Spencer, up 15.10p at 363.60p, Burberry, up 36.00p at 1,192.00p, Intercontinental Hotels Group, up 4.70p at 157.15p and International Consolidated Airlines, up 12.70p at 425.00p.

The biggest fallers on the FTSE 100 were BP, down 14.40p at 514.60p, Centrica, down 5.20p at 195.00p, Shell, down 74.50p at 3,120.00p, Sage Group, down 20.00p at 856.00p and Tesco, down 10.20p at 444.10p.

Thursday’s global economic calendar has eurozone consumer confidence data plus US GDP and personal consumption expenditures figures.

Thursday’s local corporate calendar has full year results from electricity generator SSE.

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