The market appears increasingly optimistic that an end to the war in Iran is in the offing as big gains in the US and Asia were matched in Europe on Wednesday morning.
The FTSE 100 is now firmly ensconced above the 10,000 mark and nearly 5% above its lows last week while Brent crude oil prices have dropped below $100 per barrel. European gas prices are in retreat and government bond yields are also easing back.
President Trump’s messaging that the war will be over in a couple of weeks and the clearest indication yet that Iran also wants to end the fighting are being seized on by investors. Eyes are likely to be glued to television screens later when Trump is set to address the American people.
Gold prices have moved higher. While demand for the precious metal’s safe haven qualities may diminish if the conflict ends, expectations for interest rate cuts continue to shift as markets weigh the next twists and turns in the conflict.
It’s likely that even a swift resolution wouldn’t mean an immediate return to normality and inflationary pressures are likely to outlast the conflict. This is evident in the Food and Drink Federation in the UK tripling its forecast for food price inflation to reach 9% by the end of the year.
The biggest gainers in London included stocks with links to the aviation sector, miners and financial stocks.
Berkeley
Berkeley has a longstanding reputation for being adroit at calling the ups and downs of the property market, particularly under the leadership of its late founder Tony Pidgley.
In that context, the moves the company has announced today will make others sit up and take notice.
New land acquisitions are on hold. Berkeley plans to prioritise profitability and maintaining balance sheet strength as it looks to navigate what it clearly expects to be a difficult period for the industry.
While it’s Berkeley taking the hit today as investors react to what is undoubtedly a downbeat statement, there will be genuine concern among those of its counterparts who aren’t able to pull the same levers or lean on the same inherent strengths.
Babcock
On a good day for good news, Babcock has confirmed an effective extension to its contract to provide services to Britain’s naval bases and nuclear submarine fleet.
This looks set to be a precursor to a new long-term deal after the previous agreement expired at the end of March. Today’s news removes a source of uncertainty for the group, which is benefiting from a backdrop of strong demand for its expertise in the nuclear and defence space.
Nike
If Nike’s recovery is a marathon rather than a sprint then the company seems to be hitting a wall. Pleas for patience from CEO Elliott Hill, a Nike lifer who returned from retirement to lead the company in October 2024, are falling on deaf ears.
Hill is looking to reverse an unsuccessful direct-to-consumer strategy and reinvigorate Nike’s status not just as a lifestyle brand but as a leader in sports performance. Nike has seen upstart challengers like On and Hoka take share, particularly in markets like running.
While third-quarter earnings actually beat expectations a less than compelling outlook saw the company’s share get a kicking after the bell on Wall Street. Sales are set to drop in the current quarter, with tariffs taking their toll and China continues to be a problem child for the group.
There was also a warning of potential impacts from events in the Middle East and all told Hill is beginning to run out of time as he looks to demonstrate he can restore Nike’s fortunes.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
