UK equities moved higher on Tuesday as optimism surrounding potential ceasefire negotiations between the United States and Iran helped improve investor sentiment, offsetting renewed strength in oil prices that pushed Brent crude back towards the $100-a-barrel mark.
The FTSE 100 advanced 0.75%, outperforming weaker European counterparts. Germany’s DAX fell 0.28%, while France’s CAC 40 declined 0.38%. Sterling weakened 0.21% against the dollar to $1.3473 as of 07:15 GMT.
Oil rebounds as tensions remain high around Strait of Hormuz
Brent crude rose more than 2% after partially retreating in the previous session, following confirmation from U.S. Central Command that American forces had carried out “self-defence strikes” targeting Iranian missile launch facilities and boats operating near the Strait of Hormuz.
Iran has effectively restricted almost all non-Iranian shipping traffic through the strategic waterway since the outbreak of hostilities, disrupting roughly one-fifth of global oil and liquefied natural gas flows.
A report from Nikkei indicated that Iran had agreed in principle to remove naval mines from the strait within 30 days under a developing memorandum of understanding tied to ceasefire discussions.
UK inflation pressures persist as retail prices climb
Data from the British Retail Consortium showed UK shop price inflation accelerated to 1.2% in May from 1.0% in April, driven by supply chain disruption linked to the conflict and higher energy costs.
Furniture as well as health and beauty products recorded some of the strongest price increases as businesses faced rising raw material and transport expenses. Food inflation, however, eased to a one-year low of 2.7%.
The BRC urged the UK government to take further action to reduce cost pressures facing retailers and consumers.
Diplomatic signals remain mixed
On the diplomatic front, Donald Trump stated on Truth Social that Iran’s enriched uranium would either be transferred to the United States “to be brought home and destroyed” or eliminated locally “in conjunction and coordination” with Tehran.
A U.S. official later confirmed that Iran had agreed in principle to those terms. However, Iranian Foreign Ministry spokesman Esmaeil Baqaei warned that “the frequent changes in the positions of American officials complicate every negotiation.”
Meanwhile, U.S. Secretary of State Marco Rubio said any agreement could still “take a couple days,” tempering expectations of an immediate breakthrough.
UK market round-up
Kingfisher plc (LSE:KGF) reported a 0.7% decline in first-quarter underlying sales amid subdued home improvement demand but maintained its full-year profit guidance, citing resilient performance across core categories despite weaker seasonal trading caused by a delayed start to spring.
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