UK equities moved higher on Wednesday after signs of easing tensions between the United States and Iran lifted investor sentiment, following reports that Washington had temporarily paused military escort operations in the Strait of Hormuz.
By 07:25 GMT, the FTSE 100 was up 1.3%, while sterling strengthened slightly against the dollar to 1.3587. European markets also advanced, with Germany’s DAX gaining 1.3% and France’s CAC 40 rising 1.14%.
Trump signals potential diplomatic progress with Iran
U.S. President Donald Trump said that “Project Freedom” — the U.S. naval and air mission escorting commercial shipping through the Strait of Hormuz — would be paused temporarily amid progress toward what he described as a “complete and final agreement” with Iran.
Despite the pause, Trump stressed that the naval blockade on Iranian ports would remain in place.
The development came shortly after U.S. Secretary of State Marco Rubio had indicated that the escort mission would continue, highlighting the rapid pace of diplomatic developments. Pakistan reportedly remains involved as an intermediary between Washington and Tehran.
Markets encouraged by de-escalation despite ongoing tensions
Investors welcomed the softer diplomatic tone, although geopolitical uncertainty remains elevated. Iranian President Masoud Pezeshkian rejected U.S. pressure, stating that Tehran would not accept unilateral demands and declaring that “no one can make us surrender.”
Meanwhile, a draft United Nations Security Council resolution backed by Bahrain, Saudi Arabia, the UAE, Kuwait and Qatar is expected to face a vote in the coming days. The proposal calls on Iran to halt attacks on shipping, remove sea mines and ensure safe maritime passage.
UK stocks in focus
Smith & Nephew
Smith & Nephew (LSE:SN.) reported first-quarter underlying revenue growth of 3.1% to $1.5 billion, supported by strong performances in sports medicine and wound management. The medical technology company also announced a $500 million share buyback programme while maintaining its full-year guidance.
Kingfisher
Kingfisher (LSE:KGF) said chief executive Thierry Garnier will step down after nearly seven years in the role and is expected to become chief executive of Ahold Delhaize in 2027. The retailer also reported a 6% increase in annual adjusted pre-tax profit and confirmed it has started the search for a successor.
J D Wetherspoon
J D Wetherspoon (LSE:JDW) posted like-for-like sales growth of 3.4% for the 13 weeks to 26 April but warned that rising energy costs linked to the Iran conflict, alongside higher taxes, could leave full-year profits slightly below market forecasts.
Diageo
Diageo (LSE:DGE) surprised markets with a 0.3% increase in quarterly organic net sales, helped by strong demand for Guinness in Britain and Ireland and World Cup-related stocking activity in Latin America and the Caribbean. However, North America remained weak, with organic sales in the region declining 9.4%.
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