Category: Market Summary

European equities traded mostly higher on Tuesday as easing tensions between Israel and Iran supported investor sentiment. The U.S. dollar retreated from a two-month high, while Brent crude slipped below $93 per barrel after both countries agreed to suspend attacks, raising expectations that diplomatic efforts could gain momentum.

Market confidence also received a boost from fresh economic data showing strong growth in both Chinese exports and imports during May.

In Europe, official figures showed German industrial production rose 0.4% month-on-month in April, reversing a revised 0.1% decline recorded in March, according to Destatis.

The result matched market expectations and marked the first monthly increase in industrial output in five months.

Separate data indicated that German exports increased 0.9% in April compared with the previous month, accelerating from March’s 0.3% gain. Economists had anticipated a 0.3% decline.

The French CAC 40 advanced 0.7%, while Germany’s DAX gained 0.5%. In contrast, the UK’s FTSE 100 slipped 0.3%, weighed down by weakness in energy stocks including BP Plc and Shell.

Among corporate movers, shares of Technip (EU:TE), Airbus (EU:AIR) and Safran (EU:SAF) moved higher after the French companies partnered with Tereos on a sustainable aviation fuel production initiative in France.

In London, scientific instruments specialist Oxford Instruments (LSE:OXIG) dropped 6.5% despite delivering full-year results that modestly exceeded expectations.

Housebuilder Bellway (LSE:BWY) climbed 3% after reaffirming its profit outlook for fiscal 2026.

Keller Group (LSE:KLR) gained 3% after announcing a $207 million contract variation related to a major highway reconstruction project in the United States.

Meanwhile, GSK (LSE:GSK) fell 3.5% after agreeing to acquire U.S.-listed oncology company Nuvalent in a deal valued at $10.6 billion.

European equity markets showed little clear direction on Tuesday as investors weighed signs of easing tensions in the Middle East while looking ahead to the European Central Bank’s upcoming interest rate decision.

By 03:04 ET (07:04 GMT), the pan-European Stoxx 600 was broadly flat. Germany’s DAX slipped 0.1%, France’s CAC 40 traded near unchanged levels, and the UK’s FTSE 100 fell 0.4%.

Sentiment was supported by announcements from Iran and Israel that they had suspended their recent exchange of attacks, helping to calm concerns over regional instability and raising hopes that U.S. President Donald Trump may be able to secure a diplomatic agreement with Tehran.

However, uncertainty remained elevated. The Strait of Hormuz, a critical route for around one-fifth of global oil and liquefied natural gas shipments, continues to face severe restrictions on tanker traffic, while Trump has indicated that the U.S. blockade of Iranian ports will remain in force.

Brent crude, the international oil benchmark, declined 1.0%, although prices remain significantly above levels seen before the conflict. At the same time, Eurozone government bond yields moved lower as investors sought safer assets.

Markets remain alert to the risk that higher energy costs could fuel another wave of inflation, potentially prompting central banks to maintain a restrictive policy stance.

The European Central Bank is widely expected to raise interest rates on Thursday as policymakers continue to focus on controlling inflation despite signs of slowing economic momentum across the 21-country euro area. In the United States, investors are also increasingly pricing in another rate increase from the Federal Reserve before year-end, following stronger-than-expected employment data released in May.

On the corporate front, GlaxoSmithKline (LSE:GSK) shares fell 2.1% after the pharmaceutical group announced an agreement to acquire oncology company Nuvalent for $10.6 billion. The transaction will provide GSK with access to three lung cancer treatment candidates and further strengthen its oncology pipeline.

UK equities traded lower on Tuesday morning as investors assessed a fragile pause in hostilities between Iran and Israel. Market sentiment remained cautious after U.S. President Donald Trump suggested negotiations were in their “final throes”, while both countries signalled that military action could resume if talks fail. Additional uncertainty emerged after reports of a U.S. military helicopter crash near the Strait of Hormuz.

The FTSE 100 fell 0.41% by 03:23 ET (07:23 GMT). Across Europe, Germany’s DAX declined 0.14%, while France’s CAC 40 managed a gain of 0.30%. Sterling strengthened modestly against the U.S. dollar, rising 0.19% to 1.3367.

Speaking to reporters at New York’s JFK Airport on Monday, Trump said Iran and Israel “were going back and forth and now they both agreed, through me, to stop,” adding that a final agreement could be reached within “two or three days.”

Meanwhile, the New York Times reported that a U.S. Army Apache helicopter crashed near the Strait of Hormuz on Monday. The cause of the incident remains unknown, although Trump confirmed that both pilots were unharmed.

Separately, U.S. Central Command said it had disabled an empty oil tanker in the Gulf of Oman after the vessel allegedly breached a U.S. naval blockade by attempting to reach an Iranian port.

Iran’s military leadership announced a suspension of operations on Monday after launching around 30 ballistic missiles at Israel since Sunday evening, describing the attacks as a “painful response” in support of Lebanon. Israel agreed to halt military action following a request from Washington, although Prime Minister Benjamin Netanyahu warned that if Iran were to “make the mistake of resuming attacks against us, we will respond with full force.”

The Israeli military issued new evacuation notices for residents of Tyre in southern Lebanon on Tuesday. Highlighting the political complexities surrounding the conflict, a senior U.S. official told Axios, “Bibi needs the war to continue to stay politically alive in Israel, and Trump needs the war to end to stay politically alive in the U.S.”

Iran’s ambassador to the United Nations, Amir Saeid Iravani, told the Associated Press that he hoped a final agreement would be reached “soon.” However, an Iranian official told Al Jazeera that recent U.S. amendments to a draft memorandum remained unacceptable, stating that “without the release of frozen assets and the lifting of sanctions, no deal is possible.”

According to the Wall Street Journal, the United States has dropped efforts to immediately refer Iran to the UN Security Council as part of a compromise aimed at securing European support for a joint resolution at the International Atomic Energy Agency’s Board of Governors.

UK Corporate Round-Up

MJ Gleeson (LSE:GLE) warned that annual adjusted pre-tax profit is likely to fall below current market expectations after delays to a major land sale, which represents roughly half of its anticipated plot sales for the current financial year.

Fellow housebuilder Bellway (LSE:BWY) reported softer customer demand after a strong start to the spring selling season, while rising fuel and energy costs continue to place pressure on profitability.

GSK (LSE:GSK) announced an agreement to acquire U.S.-listed oncology specialist Nuvalent in a $10.6 billion all-cash transaction. The offer values Nuvalent at $124 per share, representing a 40% premium to the company’s previous closing price, and is intended to strengthen GSK’s position in lung cancer treatments.

Meanwhile, investors in BP (LSE:BP.) remain unclear about the circumstances surrounding the departure of former chairman Albert Manifold in May, according to a report by the Financial Times.

FTSE 100 slips as investors monitor easing Middle East tensions. Bellway maintains guidance while GSK agrees an £8bn cancer drug acquisition.

Market Overview

European markets were mixed at the open as easing tensions in the Middle East helped stabilise investor sentiment. The FTSE 100 slipped 0.27 per cent to 10,325.57, while the CAC 40 fell 0.23 per cent and the DAX lost 0.58 per cent. In contrast, US markets finished higher overnight, with the Nasdaq gaining 0.65 per cent and the S&P 500 adding 0.31 per cent. Investors continued to assess developments around Iran-Israel ceasefire efforts and the potential implications for energy markets and broader risk appetite.

Commodity markets reflected improving geopolitical sentiment. Brent crude moved lower after recent volatility linked to Middle East tensions, while copper and natural gas advanced. Gold was little changed as safe-haven demand eased. Sterling strengthened against the US dollar, euro, Japanese yen, Swiss franc and Australian dollar, while Bitcoin weakened against the pound. Markets remain focused on geopolitical developments, energy prices and the outlook for global economic growth.

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Market Numbers

FTSE 100: Down (-0.27%), 10,325.57

CAC40: Down (-0.23%), 8,199.290

DAX: Down (-0.58%), 24,616.22

NASDAQ: Up (0.65%), 29,573.0

S&P 500: Up (0.31%), 7,425.0

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In the Headlines

Spring Demand Slows – Bellway (LSE:BWY)

Bellway said higher mortgage costs softened demand during the spring selling season, although reservation rates and cancellation levels remained broadly stable. The housebuilder maintained its full-year profit and completion guidance, signalling confidence in underlying market conditions despite affordability pressures.

Cancer Drug Acquisition – GSK (LSE:GSK)

GSK has agreed to acquire US lung cancer specialist Nuvalent in a deal worth approximately £8 billion. The transaction strengthens GSK’s oncology pipeline and underlines the company’s strategy of expanding its portfolio of targeted cancer treatments.

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Currencies (vs GBP)

USD: Up (0.20%), $1.3365

CHF: Up (0.09%), Fr.1.06506

EUR: Up (0.15%), €1.1578

JPY: Up (0.20%), ¥214.076

AUD: Up (0.13%), $1.894520

Bitcoin (BTC/GBP): Down (-0.37%), £47,144.1

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Commodities

Copper: Up (0.78%), 6.42364

Gold: Up (0.01%), 4,330.29

Brent Crude: Down (-1.30%), 92.202

Natural Gas: Up (0.63%), 3.173

European airline shares came under pressure on Monday after the International Air Transport Association (IATA) sharply reduced its forecast for global airline profitability in 2026, warning that soaring fuel costs linked to disruptions in the Middle East are expected to weigh heavily on the sector.

Shares of IAG (LSE:IAG), Air France-KLM (LSE:AF), Lufthansa (TG:LHA), Wizz Air (LSE:WIZZ) and Ryanair (LSE:0A2U) declined between 1.47% and 2.1% by 04:40 ET (08:40 GMT). easyJet (LSE:EZJ) proved more resilient, falling 0.86%.

Fuel costs drive sharp downgrade to earnings outlook

IATA now forecasts the global airline industry will generate net profits of $23 billion in 2026, down sharply from $45 billion in 2025 and significantly below its previous projection of $41 billion.

The industry’s net profit margin is expected to narrow to 2.0% from 4.2% a year earlier, while profit generated per passenger is projected to fall from $9.10 to $4.50.

“Profits will shrink from $45 billion in 2025 to $23 billion this year. And margins will shrink from 4.2% to 2.0%,” said Willie Walsh, IATA’s Director General. “It won’t even buy you a hot dog at most of the FIFA World Cup venues.”

According to IATA, the primary challenge facing airlines is the sharp increase in fuel expenses.

Jet fuel prices expected to surge

The association expects jet fuel prices to average $152 per barrel in 2026, compared with $90 per barrel in 2025, based on an assumed average Brent crude price of $95 per barrel.

As a result, total fuel expenditure is forecast to jump 40% to $350 billion from $252 billion in 2025. Fuel is expected to account for 31.4% of airline operating costs, up from 25.4% last year.

Overall operating expenses are projected to rise to $1.117 trillion, exceeding the pace of revenue growth. Industry revenue is expected to increase 9.4% to $1.165 trillion.

European carriers face profit squeeze

European airlines are expected to experience a significant decline in profitability under the new forecasts.

IATA projects net profit for the region’s carriers will fall to $9.60 billion in 2026 from $13 billion in 2025. Net margins are forecast to decline from 4.5% to 3.1%, while profit per passenger is expected to drop to $7.50 from $10.30.

Although European airlines had hedged approximately 70% of their fuel requirements before the latest crisis, IATA warned that higher fuel prices will increasingly affect earnings as existing hedging contracts expire.

Middle East airlines face the steepest decline

The most severe impact is expected in the Middle East, where airlines are forecast to move from a combined net profit of $7.20 billion in 2025 to a net loss of $4.30 billion in 2026.

Demand, measured by revenue passenger kilometres, is expected to decline by 11.4% across the region.

Elsewhere, North American carriers are projected to generate net profits of $9.40 billion, down from $12.40 billion, while airlines in the Asia-Pacific region are expected to see profits fall to $6.60 billion from $9.80 billion.

“Smaller carriers that started the year with weak balance sheets are certainly struggling,” Walsh said.

Returns fall below cost of capital

IATA also expects returns on invested capital to decline to 4.3% in 2026, compared with 6.6% in 2025. That figure remains below the estimated weighted average cost of capital of 8.5%.

Despite the weaker profitability outlook, the industry is still expected to generate total revenues of $1.165 trillion, carry 5.10 billion passengers and achieve a record load factor of 84%.

The figures highlight the resilience of travel demand but also underline the growing financial pressure airlines face as fuel costs continue to climb.

Investors began the week navigating a mix of geopolitical tensions, concerns over artificial intelligence valuations and anticipation ahead of Apple’s (NASDAQ:AAPL) annual developers conference, where the company is expected to outline the next phase of its AI strategy.

U.S. futures point to a mixed open

At 03:32 ET (07:32 GMT), futures tied to the Dow Jones Industrial Average were down 102 points, or 0.25%, while S&P 500 futures gained 0.3% and Nasdaq 100 futures advanced 0.7%.

The mixed performance followed a sharp sell-off on Wall Street on Friday. A stronger-than-expected U.S. employment report increased expectations that the Federal Reserve may need to maintain a tighter monetary stance or even raise rates later this year if energy-driven inflation accelerates.

The S&P 500 posted a 2.64% decline, its worst daily performance of 2026, ending a nine-week winning streak. Technology stocks were particularly weak, with the Philadelphia Semiconductor Index falling more than 10% after Broadcom’s (NASDAQ:AVGO) quarterly results failed to meet the market’s elevated expectations surrounding AI-related growth.

Commenting on the week ahead, Deutsche Bank analysts wrote: “What a backdrop for the main economic event of the week, namely Wednesday’s May U.S. CPI report.”

They added: “The timing is critical with the [Fed]’s next policy meeting, and Kevin Warsh’s first as Chair, a week later. For a while now the case for hiking has looked notably stronger than the case for a cut and last Friday’s payrolls has hugely reinforced that.”

Fresh Iran-Israel clashes unsettle investors

Geopolitical concerns intensified after Iran and Israel exchanged new strikes, casting doubt on the future of a fragile ceasefire brokered by the United States.

The renewed hostilities mark the first direct military confrontation between the two countries since the truce reached in April.

Reports suggest the latest escalation began with an Israeli strike on Beirut, followed by retaliatory actions from Tehran and further Israeli attacks against targets in western and central Iran.

The Wall Street Journal reported that Israel activated air-raid warning systems and intercepted a ballistic missile launched from Yemen. Iran’s Revolutionary Guards also claimed responsibility for attacks on military airbases in southern Israel.

While President Donald Trump maintained that diplomatic efforts remain on track, an Iranian source involved in negotiations told MS NOW that a deal is “no longer feasible at this stage.”

Oil extends gains amid supply concerns

Brent crude climbed 5.1% to $97.81 per barrel as traders continued to assess the risks posed by disruptions around the Strait of Hormuz.

The strategic shipping route remains a key concern for energy markets, given that roughly 20% of global oil and LNG flows pass through the waterway.

Rising crude prices have reignited fears that inflation could accelerate once again, potentially forcing central banks to keep borrowing costs elevated.

RBC analysts noted that “it seems as though good news is being treated as bad news if it stokes fears of higher interest rates.”

Gold pressured by rates outlook and stronger dollar

Gold prices fell to their lowest level in eleven weeks as investors reassessed the outlook for interest rates.

Higher borrowing costs tend to reduce the appeal of non-yielding assets such as gold, while continued demand for the U.S. dollar has provided an additional headwind for bullion.

ING analysts said: “The geopolitical backdrop is also shifting dollar-positive, with most surprised that Brent is not trading even higher now that Iran and Israel are directly exchanging fire.”

Apple’s AI strategy under the spotlight

Attention is also turning to Apple’s Worldwide Developers Conference, which begins on Monday and is expected to feature a range of AI-related announcements.

Investors are looking for evidence that Apple can close the perceived gap with rivals in the race to commercialise artificial intelligence technologies.

The company has faced criticism following delays to planned Siri upgrades and a lukewarm response to some of its initial AI initiatives.

According to BofA Global Research, “The key announcements to watch include an enhanced Siri experience, progress on Gemini-enabled Apple AI, potential Siri app, and broader app-intent and developer tools that could help define Apple’s agentic AI roadmap.”

FTSE 100 edges higher as oil jumps on Middle East tensions. Tate & Lyle agrees takeover while Audioboom ends sale process after record trading.

Market Overview

European markets weakened as geopolitical tensions in the Middle East weighed on sentiment. The FTSE 100 edged higher by 0.11 per cent, while the CAC 40 and DAX fell 0.32 per cent and 0.75 per cent respectively. In the United States, markets were more resilient, with the Nasdaq rising 1.16 per cent and the S&P 500 gaining 0.74 per cent. Investors continued to assess the impact of renewed Iran-Israel hostilities, while concerns around artificial intelligence valuations also contributed to caution across European equities.

Commodity markets reflected the geopolitical backdrop, with Brent crude surging as traders responded to escalating conflict risks and concerns over energy supply routes. Copper advanced modestly, while gold remained softer despite safe-haven demand. Natural gas declined and Bitcoin weakened against sterling. Currency markets were relatively stable, with sterling strengthening against the euro, yen and Australian dollar, while slipping slightly against the US dollar.

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Market Numbers

FTSE 100: Up (0.11%), 10,345.29

CAC40: Down (-0.32%), 8,218.240

DAX: Down (-0.75%), 24,759.05

NASDAQ: Up (1.16%), 29,185.8

S&P 500: Up (0.74%), 7,412.0

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In the Headlines

Takeover Agreement – Tate & Lyle (LSE:TATE)

Tate & Lyle has agreed a £2.7 billion takeover by a US rival, marking a significant transaction in the food ingredients sector. The deal highlights ongoing consolidation activity and provides shareholders with a clear valuation benchmark amid a challenging global economic backdrop.

Sale Process Ends – Audioboom (LSE:BOOM)

Audioboom has ended its strategic review and abandoned plans for a sale after determining that takeover proposals did not adequately reflect the company’s value. The decision follows record first-half trading performance, with management expressing confidence in the group’s standalone growth prospects.

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Currencies (vs GBP)

USD: Down (-0.04%), $1.3344

CHF: Flat (0.12%), Fr.1.06350

EUR: Up (0.03%), €1.1574

JPY: Up (0.05%), ¥213.765

AUD: Up (0.10%), $1.891290

Bitcoin (BTC/GBP): Down (-0.28%), £47,369.1

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Commodities

Copper: Up (0.33%), 6.33348

Gold: Down (-0.45%), 4,308.77

Brent Crude: Up (4.46%), 96.131

Natural Gas: Down (-0.91%), 3.144