Lunchtime market roundup: Markets recover amid Trump's about-turn

Stock prices in London were volatile at Monday midday after early losses, as US President Donald Trump announced a five-day pause in strikes against Iran’s energy infrastructure, while Iranian media announced that there were no negotiations with the US.

The FTSE 100 index was down 21.16 points, 0.2%, at 9,897.17. The FTSE 250 was down 73.51 points, 0.3%, at 21,268.46, and the AIM all-share was down 6.48 points, 0.9%, at 711.69.

The Cboe UK 100 was down 0.1% at 985.02, the Cboe UK 250 was down 0.3% at 18,453.38, and the Cboe small companies was down 0.8% at 16,839.16.

In European equities on Monday, the CAC 40 in Paris was up 1.1%, while the DAX 40 in Frankfurt was up 1.5%.

Markets swung sharply after US President Donald Trump said around 1115 GMT that he had instructed strikes against Iranian energy sites to be postponed for five days and that talks were under way to end hostilities.

Bond markets reversed course, with yields falling globally. Stocks turned positive in Europe and pared losses elsewhere, while the dollar dropped into negative territory for the day.

Trump said the US has held ‘productive conversations’ with Iran on a ‘complete and total resolution’ of the conflict. In a post on Truth Social, he said he had instructed officials to delay any strikes on Iranian power plants and energy infrastructure for five days, subject to the outcome of ongoing discussions.

He said the two sides had engaged in ‘very good and productive conversations’ over the past two days and that talks would continue throughout the week. The announcement marked a potential de-escalation after earlier warnings of possible attacks on Iran’s energy infrastructure.

‘BASED ON THE TENOR AND TONE OF THESE IN DEPTH, DETAILED, AND CONSTRUCTIVE CONVERSATIONS, WITCH WILL CONTINUE THROUGHOUT THE WEEK, I HAVE INSTRUCTED THE DEPARTMENT OF WAR TO POSTPONE ANY AND ALL MILITARY STRIKES AGAINST IRANIAN POWER PLANTS AND ENERGY INFRASTRUCTURE FOR A FIVE DAY PERIOD, SUBJECT TO THE SUCCESS OF THE ONGOING MEETINGS AND DISCUSSIONS,’ Trump wrote on Truth Social.

After his post, Iranian media reported that there were no negotiations with the US.

‘There are no talks between Tehran and Washington,’ said Mehr news agency citing Iran’s foreign ministry, adding that Trump’s statements were part of a push ‘to reduce energy prices’.

Energy prices tumbled following Trump’s comments, with Brent slipping back below $100 a barrel. Brent crude traded at $98.96 at midday Monday, down from $109.78 late Friday and retreating from an earlier high.

European gas prices also slid sharply, easing inflation concerns. Gold and other metals reversed earlier gains, and rate hike bets were rapidly unwound.

Traders were now pricing in just over a 50% chance of a hike in April from the BoE, and saw fewer than three increases by the end of the year.

However, the sharp reversal is just about holding but has cooled off as yet more uncertainty is poured into the situation in the Middle East

Iranian state television said Trump backed down following a ‘decisive warning’ from Tehran, though there was no immediate official response from the Iranian government to Trump’s announcement of ‘productive’ talks.

A graphic on state TV claimed the US president retreated from his threat to bomb power plants after Iran issued a warning, the nature of which was not immediately clear. Trump had said late Saturday that the US would strike Iran’s power plants if the Strait of Hormuz was not reopened within 48 hours. Tehran responded by threatening to target US-linked financial institutions and ‘vital’ infrastructure in the Middle East.

Michael Brown, senior research strategist at Pepperstone, said: ‘It appears that, yes, they do eat TACOs in Tehran – at least if Trump’s social media is anything to go by. President Trump, ahead of a self-imposed 11pm deadline for his ultimatum for Iran to re-open the Strait of Hormuz, has once again caught market participants off-guard with a Truth Social post.

‘This is clearly a positive development...[but] Trump notes in his post that the five day pause will be contingent on the success of ‘ongoing meetings and discussions’, meaning that things could escalate once more, if talks were to fall apart.

Brown added: What’s the playbook now? Right now, it’s clearly a risk-on one, with stocks ripping higher, crude benchmarks rolling over, and the dollar being sold hard. How long that lot lasts, though, is contingent on the pause in strikes holding all week, and probably on further progress now being made towards a more material truce or ceasefire, which could well bring things to more of a permanent conclusion.

‘Until that emerges, while the initial market bias has tilted in a positive direction, conviction to take that too much further could well be lacking just a little, with a degree of risk premium still set to be priced into energy benchmarks.’

The pound was quoted at $1.3371 midday Monday, higher compared to $1.3323 Friday. Against the euro, sterling rose to €1.1563 from €1.1526 a day prior. The euro stood at $1.1559, higher against $1.1527. Against the yen, the dollar was trading at JP¥158.89, lower compared to JPYY159.20.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 1.2%, the S&P 500 index up 1.1%, and the Nasdaq Composite up 1.2.

The yield on the US 10-year Treasury was quoted at 4.39%, widening from 4.37%. The yield on the US 30-year Treasury was quoted at 4.94%, widening from 4.94%.

In London, miners that had been at the bottom of the FTSE 100 in the morning were among the winners, with Anglo American up 4.5% and Antofagasta up 4.3%.

Among the losers, oil majors BP and Shell fell 3.7% and 3.5%, respectively, pressured by the sharp drop in oil prices.

Goodwin was at the bottom of the FTSE 250. Shares plunged after the company said it lost two contract tenders since October and is considering reducing its dividend payout rate in response to uncertainty linked to the war in Iran. The engineering firm is reviewing a return to its previous policy of distributing up to 38% of post-tax profit plus depreciation and amortisation.

Among smaller caps, Quadrise rose 17% after saying progress in the first half to December 31 leaves it ‘better positioned for commercialisation’. Pretax loss widened to £2.0 million from £1.7 million a year earlier, while revenue totalled £45,000 compared with none a year prior.

Thungela Resources fell 14% after reporting a pretax loss of R 7.99 billion in 2025, swinging from a profit of R 4.99 billion in 2024. Revenue declined 17% to R 29.60 billion from R 35.55 billion, reflecting weaker coal prices and a stronger rand.

Gold was quoted at $4,358.46 an ounce against $4,593.70.

Still to come on Monday’s economic calendar is eurozone consumer confidence.

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