Lunchtime market roundup: Stocks rise on US-Iran de-escalation hopes
European stocks were on the rise at the start of a week loaded with central bank meetings, buoyed by hopes of de-escalation in the conflict between the US and Iran.
Over in New York, a strong start to the day is also expected, ahead of a "Super Bowl" of a week which sees tech earnings roll in.
The FTSE 100 index traded 51.15 points higher, 0.5%, at 10,787.38 on Monday. The FTSE 250 added 168.36 points, 0.7%, at 23,969.85, and the AIM all-share added 1.58 points, 0.2%, at 774.56.
The Cboe UK 100 was up 0.4% at 1,072.59, the Cboe UK 250 added 0.8% at 20,859.07, and the Cboe small companies was 0.5% higher at 18,651.78.
In Frankfurt, the DAX 40 soared 1.6%. The CAC 40 was 0.8% higher.
Against the dollar, sterling fell to USD1.3333 on Monday afternoon from USD1.3342 at the time of the London equities close on Friday. Versus the euro, it eased to EUR1.1689 from EUR1.1717.
Against the dollar, the euro climbed to USD1.1400 from USD1.1385. The dollar fell to JPY163.55 against the yen from JPY163.70.
The Brent price was markedly lower, declining to USD88.87 a barrel early Monday afternoon from USD95.49 at the time of the London equities close on Friday and slumping 9.5% from USD98.25 at the end of last week. Gold traded at USD4,097.70 an ounce on Monday, rising from USD4,078.09 late Friday.
"There has been a major shift in financial markets this morning. Reports that the US and Iran have agreed to a pause in hostilities after two weeks of relentless bombing by both sides, has been warmly welcomed by investors. This has dramatically reduced the geopolitical risk premium; the Brent crude oil price is down 10%," XTB analyst Kathleen Brooks commented.
"The question now is, will the deescalation in tensions between Iran and the US have a longer-term dampening impact on the oil price, and will it lead to reduced inflationary concerns as we lead up to some key central bank meetings? Over the weekend there were no new strikes in Iran or the Strait of Hormuz for a second day in a row. This sudden calm, after two weeks of attacks, spurs hopes of a return to diplomacy."
The yield on the 10-year US Treasury cooled to 4.64% on Monday from 4.66% at the time of the London equities close on Friday. The 30-year yield eased to 5.12% from 5.14%.
In New York, the Dow Jones Industrial Average and S&P 500 are called to open 1.0%, while the Nasdaq Composite is set to surge 1.6%.
Analysts at Barclays commented: "A massive earnings week for Big Tech, a toss-up Fed meeting in the middle, and more US-Iran headlines; this is 'Super Bowl' week for macro investors."
Earnings from Microsoft, Meta Platforms, Apple and Amazon are on the docket this week.
The Federal Reserve, meanwhile, is expected to hold on Wednesday.
Analysts at Barclays commented: "At the June FOMC, Chair Warsh said he wants markets to react to data, and not the Fed's perceived reaction function. With market pricing for July at 8bp and 17bp in September, investors believe hikes are needed to get inflation to 2%. Markets also believe, given the lack of forward guidance, that every meeting should now be considered live.
"July is clearly a good chance for the Fed to commit strongly to price stability by surprising markets. Our baseline is for a hold, but we feel that the decision is now a virtual toss-up in the new Fed regime."
On Thursday, the Bank of England is also expected to stand pat. Lloyds Bank sees a 7-2 or 6-3 vote split in favour of a hold.
In London, there were M&A developments aplenty.
DCC Energy rose 1.2% as it agreed to a £5.75 billion takeover. The Dublin-based provider of sales, marketing and distribution services to the energy sector is being acquired by a consortium comprised of funds advised by Kohlberg, Kravis, Roberts & Co LP and Energy Capital Partners Management LP.
Pinewood motored 34% higher as the software provider for automotive sellers said Friday it would be "minded to recommend" a possible offer by Ridgeview Partners. The offer is priced at £4.48 per share in cash, valuing Pinewood's entire issued and to be issued ordinary share capital at £545 million.
Pharos Energy has agreed to an all-cash takeover offer from Serica Energy that values Pharos at £145.7 million, the two London-listed companies announced on Sunday evening. Pharos added 30%, while Serica lost 5.8%.
AJ Bell analyst Russ Mould commented: "Another day brings another raft of takeover and acquisition activity in the UK stock market.
"All of this activity takes the total value of live or completed bids in the UK this year to more than £70 billion, with an average takeover premium of 40%."
AstraZeneca shares rose 2.0%. The drugmaker still expects total revenue for 2026 to rise by a mid-to-high single-digit percentage, with core EPS climbing by a low double-digit percentage.
In the second quarter, revenue rose 6.4% to USD15.38 billion from USD14.46 billion. Core operating profit per share in the second quarter climbed 21% on-year to USD2.63, beating consensus of USD2.49.
Elsewhere, AOTI jumped 14%. The wound healing-focused medical technology firm said revenue was up 10% to around USD35 million in the six months to June 30, from USD31.8 million. On an underlying basis, it was up 18%.
The underlying measure excludes Arizona Medicaid. It stopped taking new Arizona patients under the US federal programme in April.
Chief Executive Officer Mike Griffiths said: "We achieved underlying high teens revenue growth, a rate notably ahead of our previously published guidance of mid-teens for the full year. We remain optimistic about the benefits these continued positive trends will have on H2 performance. This underlying trajectory benefitted from our significant commercial restructure, which is still only in the early stages of realisation and was generated despite continued headwinds from the one big beautiful bill act which has continued to affect our Medicaid expansion plans."
Still to come on Monday is a US durable goods orders reading at 1330 BST.
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