Category: Market Summary

FTSE 100 rises as US-Iran talks support sentiment. BAT upgrades forecasts, Chemring profits fall, while gold gains and oil softens.

Market Overview

Markets were mixed overnight, with the FTSE 100 advancing 0.37 per cent to 10,365.42, while the CAC 40 and DAX slipped 0.45 per cent and 0.40 per cent respectively. In the United States, the Nasdaq gained 0.24 per cent, while the S&P 500 edged 0.05 per cent lower. Investor sentiment was supported by ongoing US-Iran discussions, although uncertainty around the outcome of negotiations continued to temper enthusiasm across European markets.

Commodity markets remained a key focus, with gold and copper moving higher while Brent crude eased despite recent gains linked to geopolitical concerns. Natural gas also advanced. Sterling strengthened against the US dollar, euro and yen, while Bitcoin retreated sharply against the pound. The combination of improving risk sentiment and continued geopolitical developments remained the dominant macro driver.

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Market Numbers

FTSE 100: Up (0.37%), 10,365.42

CAC40: Down (-0.45%), 8,146.590

DAX: Down (-0.40%), 25,003.04

NASDAQ: Up (0.24%), 30,478.8

S&P 500: Down (-0.05%), 7,592.5

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In the Headlines

Forecast Upgrade – British American Tobacco (LSE:BATS)

British American Tobacco raised its forecast for growth in its new-category business, citing strong demand for vaping products and nicotine pouches. The update highlights the group’s continued shift away from traditional tobacco products and supports confidence in future earnings growth.

Expansion Costs Weigh – Chemring Group (LSE:CHG)

Chemring reported an 8 per cent decline in first-half profit despite higher sales, as significant investment in capacity expansion increased costs. The defence technology group’s results underline the near-term impact of growth spending while demand across its markets remains robust.

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Currencies (vs GBP)

USD: Up (0.13%), $1.3472

CHF: Down (-0.06%), Fr.1.05788

EUR: Up (0.01%), €1.1564

JPY: Up (0.16%), ¥215.174

AUD: Down (-0.03%), $1.876430

Bitcoin (BTC/GBP): Down (-2.23%), £51,804.7

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Commodities

Copper: Up (0.85%), 6.65962

Gold: Up (1.10%), 4,534.13

Brent Crude: Down (-1.42%), 93.624

Natural Gas: Up (0.47%), 3.202

European equities opened higher on Tuesday, supported by strong gains in technology stocks, while oil prices eased as investors continued to assess the prospects for a diplomatic resolution to tensions in the Middle East.

Technology shares led the advance, with semiconductor manufacturer STMicroelectronics (BIT:STMMI) climbing to its highest level in more than 25 years after raising revenue targets for its rapidly expanding data centre business. The move provided further evidence of the strong investor appetite for companies benefiting from the growth of artificial intelligence infrastructure.

By 07:14 GMT, the pan-European Stoxx 600 index had gained 0.7%. Germany’s DAX rose 1.0%, France’s CAC 40 advanced 0.9%, and the UK’s FTSE 100 added 0.3%.

STMicro Drives Technology Sector Higher

Investor sentiment in the technology sector was strengthened by STMicroelectronics’ improved outlook for its data centre operations, which are benefiting from growing demand linked to artificial intelligence applications.

The company’s upgraded targets reinforced expectations that investment in AI infrastructure will remain a key growth driver for semiconductor manufacturers and related technology businesses.

The strong performance of STMicro shares helped lift broader European technology indices and contributed significantly to the region’s market gains.

Oil Prices Ease as Markets Monitor Diplomatic Developments

Oil prices moved lower as traders weighed mixed signals regarding ongoing diplomatic efforts involving Iran and the United States.

Brent crude, the global benchmark, fell 0.9% to $94.13 per barrel, reversing part of the gains recorded on Monday after reports indicated that Iran had halted indirect communications with Washington.

Market sentiment received some support after Lebanon announced a partial ceasefire between Israel and the Iran-backed Hezbollah movement. However, concerns remained after Israel’s military reported intercepting two projectiles launched from Lebanon on Tuesday, according to Reuters.

Trump Signals Optimism on Potential Iran Agreement

U.S. President Donald Trump told ABC News that he believes a peace agreement with Iran could be reached within the coming week.

According to Trump, there “was a little glitch” in the negotiations, a comment widely interpreted as a reference to Iran’s objections to Israeli military actions in Lebanon, which reportedly prompted Tehran to suspend its participation in talks.

It remained unclear whether negotiations between the United States and Iran had formally resumed.

Earlier, Trump told CNBC that he was unconcerned by reports that Iran had stopped responding to diplomatic contacts. Later, however, he adopted a more positive tone, stating that discussions with Tehran were “progressing rapidly.”

Investors continue to monitor developments closely, with any breakthrough or setback likely to influence both energy markets and broader investor sentiment.

European luxury companies are increasingly targeting the United States as they seek to attract a growing class of affluent consumers whose fortunes have benefited from the ongoing technology and artificial intelligence boom. A wave of boutique openings, flagship stores and high-profile fashion events is helping brands offset softer demand and weaker consumer confidence in other parts of the world.

After enduring two years of declining sales, the luxury industry had begun to show signs of recovery before the outbreak of the Iran conflict at the end of February. The war has disrupted international travel and weighed on luxury spending across several regions, extending its impact beyond the Middle East.

At the same time, China, which has been the industry’s primary engine of growth for more than two decades, continues to face economic challenges linked to deflationary pressures and the lingering effects of its property market downturn. As a result, wealthy American consumers have become increasingly important to the sector.

U.S. Luxury Consumers Remain Resilient

“The U.S. high-end consumer has been much more resilient than we are seeing elsewhere, especially in Europe,” said Marcus Morris-Eyton, portfolio manager at AllianceBernstein in London, adding that the continued AI rally and healthy wage growth have boosted this cohort of spenders.

Luxury groups including LVMH (EU:MC), Moncler (BIT:MONC) and Gucci (EU:KER) have moved quickly to capitalize on this trend.

Last month, both Dior and Gucci showcased their cruise collections in the United States, while Italian fashion house Zegna is scheduled to unveil its Summer 2027 collection in Los Angeles on Friday.

Store Expansion Accelerates Across America

North America became the leading market for new luxury store openings in 2025 for the first time since Savills began tracking the sector in 2016.

According to the real estate firm’s latest global luxury retail report, North America accounted for approximately 27% of all luxury store openings worldwide last year, compared with 26% in Europe and 19% in China. Overall, the number of new luxury stores globally fell to its lowest level since 2020.

Untapped Potential Beyond Major Cities

Research from Savills suggests the United States remains relatively underpenetrated by luxury retailers when compared with the size of its ultra-wealthy population.

“Many brands still view the U.S. as unpenetrated relative to the scale of its wealth base,” said Todd Siegel, Chicago-based president of U.S. retail at real estate firm Savills.

Luxury companies are increasingly looking beyond traditional markets such as New York and Los Angeles, targeting secondary cities and states that have attracted affluent residents seeking lower taxes and lifestyle changes.

Moncler, for example, has indicated that most of its planned store openings this year will be in the United States. The company launched a location in Aspen earlier this year and plans to open its largest global flagship store on New York’s Fifth Avenue later in 2026, alongside new stores in California’s Valley Fair and Dallas.

Meanwhile, Hermès (EU:RMS) expanded into Nashville, Tennessee, and Scottsdale, Arizona, last year and plans additional openings near Chicago and in Brooklyn during the coming months.

A Two-Speed Luxury Market

Consultancy Bain described the current luxury landscape as a “two speed world,” with the United States and parts of Asia continuing to grow while Europe and the Middle East face pressure from weaker tourism and the consequences of the ongoing Iran conflict.

Although most luxury companies do not break out U.S.-specific results, first-quarter earnings reports suggest the Americas significantly outperformed other regions.

Richemont (BIT:1CFR), owner of Cartier, reported an 18% increase in sales across the Americas between January and March, marking its ninth consecutive quarter of double-digit growth in the region.

American Luxury Demand Benefits Domestic Brands

The strength of affluent U.S. consumers has also supported American luxury and premium brands.

Ralph Lauren (NYSE:RL) and Tapestry (NYSE:TPR), the owner of Coach, have both delivered stronger sales growth than many competitors.

“Our core customers are loyal and resilient,” Ralph Lauren Chief Product & Merchandising Officer Halide Alagoz told Reuters. “What we see so far is that their behaviours are not changing. On the contrary, consumers during these turbulent times want to come to brands that they can trust.”

Tapestry Chief Executive Joanne Crevoiserat also highlighted growth opportunities in the region.

“We’re building emotional connections and bringing new, younger consumers into the market in North America and beyond,” she said.

China Remains Critical for a Full Recovery

Despite the strength of U.S. spending, analysts caution that the luxury sector cannot rely solely on American consumers for a sustained recovery.

Morgan Stanley analyst Edouard Aubin noted that upcoming U.S. stock market listings could stimulate demand for luxury watches and jewellery, but emphasized that American buyers account for only around one-fifth of global luxury spending.

“It’s nice, it’s helpful, but you need China to get better as well for the sector to really recover,” he said.

UK equities moved modestly higher on Tuesday, while major European markets posted stronger gains as investors assessed diplomatic developments involving the United States and Iran alongside ongoing geopolitical tensions in the Middle East.

The FTSE 100 added 0.26%, while Germany’s DAX rose 0.95% and France’s CAC 40 gained 0.84%. Sterling also strengthened against the U.S. dollar, rising 0.15% to 1.3474 as of 03:14 ET (07:14 GMT).

Diplomatic Progress Supports Market Confidence

Investor sentiment remained broadly positive after U.S. President Donald Trump indicated that discussions with Iran were progressing at a “rapid pace.”

The comments came despite reports suggesting that Tehran was still reviewing the final draft of a proposed memorandum of understanding and had not yet issued an official response.

According to Iran’s semi-official Mehr News agency, Iranian officials said any future agreement must deliver “real benefit” to Tehran, reflecting concerns over the durability of commitments made by Washington under previous arrangements.

Trump also stated that he expected a wider agreement with Iran to be reached within the next week.

Middle East Security Concerns Remain in Focus

Developments in Lebanon continued to attract investor attention. Trump said that Israel and Hezbollah had agreed to halt attacks following discussions involving Israeli Prime Minister Benjamin Netanyahu and representatives associated with the Iran-backed organization.

However, optimism surrounding the reported ceasefire was tempered by reports of renewed fighting overnight between Israeli forces and Hezbollah militants in southern Lebanon.

Regional tensions remained elevated after outgoing Mossad chief David Barnea called for continued efforts to remove Iran’s current leadership, while Iranian officials reiterated that the country would respond to any future threats and rejected external pressure.

Energy Markets Watch Key Shipping Routes

Energy traders remained focused on potential disruptions to critical maritime transport routes in the region.

Officials linked to Iran warned that risks could extend beyond the Strait of Hormuz to include the Bab el-Mandeb Strait, a strategically important corridor for global trade and energy shipments.

Concerns over shipping security increased following reports of an attack on a commercial vessel near Iraq’s Umm Qasr port. Meanwhile, U.S. officials said commercial traffic through the Strait of Hormuz was continuing with military guidance and oversight.

UK Market Focus: Chemring Reports Record Order Book

Among UK-listed companies, Chemring (LSE:CHG) reported interim results showing an 8% decline in underlying operating profit for the first half despite delivering higher revenue.

The defence and aerospace group said earnings were affected by substantial investment in manufacturing capacity expansion and weaker margins within its Sensors & Information division. Despite these pressures, Chemring’s order book reached a record £1.40 billion, providing strong visibility for future revenue and reflecting continued demand across global defence markets.

U.S. stock futures traded in positive territory early Monday, indicating Wall Street could open with gains as investors continue to embrace the artificial intelligence theme following Nvidia’s (NASDAQ:NVDA) latest product launch.

The upbeat mood follows a record-setting finish to last week, when the major U.S. indices closed at all-time highs despite ongoing geopolitical uncertainty.

Nvidia and Microsoft Showcase Next-Generation AI Computing

Technology stocks attracted fresh attention after Nvidia (NASDAQ:NVDA) introduced RTX Spark, a new AI-focused processor platform developed alongside Microsoft (NASDAQ:MSFT).

According to Nvidia, the new technology is designed to redefine the Windows PC experience by enabling advanced personal AI assistants to handle tasks directly on users’ devices.

“The PC is being reinvented,” said NVIDIA founder and CEO Jensen Huang. “For forty years, you launched apps. Click. Type. With RTX Spark and Microsoft Windows, you ask — and the PC does the work.”

Investors welcomed the announcement, sending Nvidia shares 2.4% higher in premarket trading. Microsoft also advanced 3.8%.

Hardware manufacturers Dell (NYSE:DELL) and HP (NYSE:HPE) moved sharply higher as traders assessed the potential for a new upgrade cycle driven by AI-capable computers.

Geopolitical Risks Continue to Influence Markets

Despite enthusiasm surrounding artificial intelligence, investors remained focused on developments in the Middle East.

Crude oil prices climbed after U.S. Central Command announced that American forces carried out “self-defense strikes” against Iranian drone-control and radar facilities over the weekend.

Iran’s Islamic Revolutionary Guard Corps later stated that it had targeted an air base allegedly connected to a U.S. operation against a telecommunications site on Sirik Island in southern Iran.

The exchange of military actions contributed to renewed concerns over regional stability and energy supplies.

Trump Maintains Optimistic Tone on Negotiations

President Donald Trump attempted to calm concerns over the situation, signaling confidence that diplomatic efforts could still produce results.

Posting on Truth Social early Monday, Trump stated that “Iran really wants to make a deal” and urged observers to remain patient as discussions continue.

“Just sit back and relax, it will all work out well in the end – It always does!” Trump said.

Market participants continue to watch negotiations closely for indications that tensions could ease in the coming weeks.

Major U.S. Indices End Week at Record Levels

Wall Street finished Friday’s session with modest gains despite intermittent volatility throughout the day.

The Dow Jones Industrial Average rose 363.49 points, or 0.7%, to close at 51,032.46.

The Nasdaq Composite added 55.15 points, or 0.2%, ending at 26,972.62, while the S&P 500 gained 16.43 points, or 0.2%, to finish at 7,580.06.

All three benchmarks established new record closing highs.

For the holiday-shortened week, the Nasdaq advanced 2.4%, the S&P 500 climbed 1.4%, and the Dow gained 0.9%.

Investors Await Details on Possible U.S.-Iran Agreement

Traders remain encouraged by reports suggesting progress toward a broader agreement between the United States and Iran, although many are waiting for official confirmation before making larger bets.

Recent media reports indicated that negotiators may have agreed on the framework of a 60-day ceasefire extension.

Such an arrangement could eventually lead to the reopening of the Strait of Hormuz and support renewed discussions regarding Iran’s nuclear activities, though President Trump has yet to formally approve the proposal.

In a separate Truth Social post, Trump said he would meet with advisors in the situation room to make a “final determination” regarding the agreement.

He also noted that several secondary issues had already been addressed but stressed that Iran must commit to never obtaining a nuclear weapon and must reopen the Strait of Hormuz immediately without imposing transit fees.

Dell’s Earnings Rally Reinforces Tech Sector Leadership

Technology shares received another boost from Dell Technologies (NYSE:DELL), whose stock soared more than 33.7% on Friday.

The move followed stronger-than-expected fiscal first-quarter results and an increase in the company’s full-year outlook.

Dell’s rally helped propel the NYSE Arca Computer Hardware Index 8.6% higher, lifting the benchmark to a record closing level.

NetApp and Software Companies Join the Advance

NetApp (NASDAQ:NTAP) was also among the session’s top performers, surging 22.4% after posting quarterly earnings that exceeded expectations and issuing upbeat guidance.

Software stocks participated in the broader technology rally, with the Dow Jones U.S. Software Index climbing 6.2% to its strongest close in four months.

Elsewhere, gold-related shares and brokerage firms recorded notable gains, while telecom, retail and natural gas stocks lagged the broader market.

European equity markets delivered a mixed performance on Monday as investors digested the latest geopolitical developments in the Middle East and tracked a sharp rise in crude oil prices.

Brent crude futures climbed more than 3% to approach $94 per barrel after military exchanges between the United States and Iran over the weekend heightened concerns about regional stability. Sentiment was further impacted after Israeli forces seized Beaufort Castle in southern Lebanon, marking the country’s deepest military advance into Lebanon in more than 25 years.

Israeli Prime Minister Benjamin Netanyahu described the capture of the strategic fortress as a “decisive shift” in Israel’s campaign against Hezbollah.

UK House Prices Register First Monthly Decline of 2026

On the economic front, fresh data from Nationwide Building Society showed that UK house prices fell in May for the first time this year as uncertainty surrounding events in the Middle East weighed on confidence.

Average house prices declined 0.6% month-on-month, reversing a 0.4% increase recorded in April. The reading was weaker than economists’ expectations for a 0.1% decline and represented the first monthly contraction of 2026.

Annual house price growth also slowed considerably, easing to 1.7% from 3.0% in the previous month.

The figures highlighted growing concerns about the potential impact of higher inflation and interest rates on the housing market.

Major European Indices Diverge

Market performance varied across the region.

London’s FTSE 100 slipped 0.2%, while France’s CAC 40 gained 0.3%. Germany’s DAX outperformed its peers, advancing 0.6% during the session.

EasyJet Climbs on Takeover Speculation

Among individual stocks, EasyJet (LSE:EZJ) posted strong gains after reports of potential acquisition interest.

The airline described a possible £3 billion approach from a U.S.-based investment group as “highly opportunistic,” while noting that any proposed transaction would likely face significant challenges before completion.

Sirius Real Estate Advances After Profit Growth

Sirius Real Estate (LSE:SRE) moved higher after reporting improved annual earnings.

The real estate investment trust announced that profit before tax increased 4.9% for the financial year ended March 31, 2026, supporting investor sentiment toward the stock.

Hunting Declines Following CEO Retirement Announcement

In contrast, shares of engineering services company Hunting (LSE:HTG) came under pressure.

The stock fell after the company revealed that Chief Executive Jim Johnson intends to retire by mid-2027, bringing to a close a career spanning more than three decades with the group.

Shares of major UK-listed energy companies traded higher on Monday after oil prices surged more than 3%, driven by renewed military exchanges between the United States and Iran that reignited concerns over Middle East supply disruptions and reduced expectations for a near-term ceasefire extension.

By late morning in London, Brent crude had climbed $2.93, or 3.2%, to $94.05 per barrel, while U.S. West Texas Intermediate rose $3.36, or 3.9%, to $90.72 per barrel.

The rebound followed a difficult month for oil markets, with both benchmarks posting sharp declines in May amid hopes that diplomatic progress could lead to the reopening of the Strait of Hormuz and improve global supply conditions.

Energy Producers Benefit from Rising Crude Prices

The move higher in oil prices provided support for UK energy stocks.

Shell (LSE:SHEL) gained around 1.2%, while BP (LSE:BP.) advanced approximately 1%.

Among independent producers, Harbour Energy (LSE:HBR) and Ithaca Energy (LSE:ITH) both rose roughly 2.2% as investors responded positively to the stronger commodity backdrop.

Military Escalation Undermines De-Escalation Expectations

Tensions escalated over the weekend after the United States announced that it had carried out “self-defence strikes” against targets in Iran.

Meanwhile, Iran’s Islamic Revolutionary Guard Corps stated that its aerospace division had launched attacks against an air base allegedly used in American military operations.

The developments added fresh uncertainty to an already fragile geopolitical situation and raised concerns about the stability of energy supplies from the region.

Israel’s Lebanon Operations Add to Regional Concerns

Further pressure on market sentiment came from developments involving Israel and Hezbollah.

Israeli forces were ordered to push deeper into Lebanon as part of ongoing operations against the Iran-backed militant group, adding another layer of complexity to efforts aimed at reducing regional tensions.

The widening scope of military activity has increased doubts over the prospects for a broader de-escalation in the near future.

Ceasefire Talks Continue but Outcome Remains Unclear

Despite the latest military actions, negotiations between Washington and Tehran reportedly continued throughout the weekend.

Both sides are said to be seeking amendments to a proposed agreement that would extend the existing ceasefire and facilitate the reopening of the Strait of Hormuz.

However, the status of those discussions remains uncertain, and no breakthrough has yet been announced.

U.S. President Donald Trump stated on Friday that a decision regarding the proposed agreement was expected soon.

Strait of Hormuz Remains Central to Oil Market Concerns

The Strait of Hormuz continues to be a focal point for global energy markets.

Roughly one-quarter of the world’s seaborne oil shipments pass through the strategic waterway, which has been largely disrupted since hostilities began in late February.

Since the start of the conflict, Brent crude has risen more than 25%, reflecting ongoing concerns about the availability of global energy supplies.

Although some tankers have successfully departed the Persian Gulf in recent weeks, attacks targeting vessels transiting the strait have persisted.

Highlighting those risks, Chevron Chief Executive Mike Wirth said on Friday that the dangers facing shipping operators remain “very real.”

FTSE 100 edges higher as investors monitor Middle East tensions. EasyJet responds to takeover interest while Drax expands renewables.

Market Overview

European markets were mixed at the open, with the FTSE 100 edging higher by 0.09 per cent to 10,377.29 and the DAX gaining 0.05 per cent to 25,104.70, while the CAC 40 slipped 0.07 per cent to 8,183.34. In the US, sentiment remained constructive as the Nasdaq advanced 0.33 per cent and the S&P 500 added 0.31 per cent. Investors continued to assess geopolitical developments in the Middle East, with uncertainty surrounding a potential US-Iran agreement and renewed regional military activity influencing risk appetite.

Commodity markets reflected ongoing geopolitical concerns. Brent crude strengthened as traders monitored developments in the Middle East, while copper also moved higher, signalling resilience in industrial demand expectations. Gold eased despite lingering geopolitical uncertainty, while Bitcoin weakened against sterling. Sterling gained modestly against major currencies including the euro, US dollar, Swiss franc, Japanese yen and Australian dollar.

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Market Numbers

FTSE 100: Up (0.09%), 10,377.29
CAC40: Down (-0.07%), 8,183.34
DAX: Up (0.05%), 25,104.70
NASDAQ: Up (0.33%), 30,323.5
S&P 500: Up (0.31%), 7,601.3

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In the Headlines

Takeover Response – EasyJet (LSE:EZJ)
EasyJet said reported takeover interest from a US investment firm would be “highly opportunistic”, signalling that management believes the airline is undervalued. The comments come as the aviation sector continues to navigate geopolitical uncertainty and fluctuating travel demand.

Solar Acquisition – Drax (LSE:DRX)
Drax has agreed a £548 million takeover of Bluefield Solar Income Fund, expanding its renewable energy portfolio and strengthening its position in the UK clean energy market. The acquisition supports Drax’s strategy of increasing exposure to long-term renewable generation assets.

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Currencies (vs GBP)

USD: Up (0.14%), $1.3465

CHF: Up (0.30%), Fr.1.05412

EUR: Up (0.12%), €1.1546

JPY: Up (0.19%), ¥214.720

AUD: Up (0.11%), $1.874520

Bitcoin (BTC/GBP): Down (-1.07%), £54,129.6

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Commodities

Copper: Up (1.04%), 6.49167

Gold: Down (-0.77%), 4,505.37

Brent Crude: Up (2.37%), 93.484

Natural Gas: Up (0.71%), 3.393

U.S. equity futures traded in positive territory early Monday, indicating a potentially stronger open on Wall Street, although escalating military tensions between the United States and Iran continued to cast a shadow over hopes for a broader diplomatic settlement.

At the same time, crude oil prices moved higher, remaining well above levels seen before the conflict began, while investors assessed reports suggesting U.S. President Donald Trump is seeking amendments to a proposed agreement aimed at easing regional tensions. In the technology sector, Nvidia (NASDAQ:NVDA) introduced a new processor platform designed specifically for Windows-based computers.

Futures Point to Further Gains on Wall Street

As of 03:23 ET, futures tied to the Dow Jones Industrial Average were up 54 points, or 0.1%. S&P 500 futures gained 20 points, or 0.3%, while Nasdaq 100 futures rose 135 points, equivalent to 0.4%.

The positive sentiment followed another strong finish for U.S. equities last week, with major benchmarks reaching fresh record closing highs. Technology shares continued to lead the market higher, helped in part by Dell’s decision to raise its full-year revenue and earnings outlook, which boosted confidence across the broader tech sector.

Investor optimism has also been supported by expectations that Washington and Tehran could eventually reach a diplomatic agreement, reducing fears that prolonged hostilities might trigger an energy-driven economic slowdown coupled with persistent inflation.

Fresh Military Escalation Challenges Diplomatic Momentum

Despite ongoing negotiations, the latest developments in the Middle East served as a reminder that a lasting agreement remains uncertain.

According to Associated Press reports, U.S. forces carried out strikes on Iranian radar and drone-control facilities after Iran allegedly shot down an American drone over the weekend. Tehran later confirmed additional retaliatory attacks, while Kuwait reported intercepting incoming drones and missiles.

Elsewhere, Israel has reportedly expanded military operations in parts of southern Lebanon following drone attacks linked to Hezbollah.

President Donald Trump has repeatedly stated that he believes Iran is interested in securing a deal, although discussions continue to focus on several unresolved issues, particularly Tehran’s nuclear programme.

Reports indicate that Trump is reviewing a proposed memorandum of understanding that would extend the current ceasefire arrangement, support the resumption of maritime traffic through the Strait of Hormuz and establish a framework for future talks concerning Iran’s nuclear activities.

However, Iran’s chief negotiator signalled over the weekend that Tehran would reject any agreement that fails to protect what it views as its sovereign rights.

Oil Markets Remain Sensitive to Hormuz Developments

Brent crude futures extended their gains, climbing 3.1% to $93.92 per barrel by 03:56 ET.

Although expectations of a diplomatic breakthrough have prevented oil prices from revisiting recent highs above $100 per barrel, prices remain substantially elevated compared with pre-conflict levels.

Market analysts note that even if an agreement is reached, shipping operations through the Strait of Hormuz may require considerable time to normalise. As a result, geopolitical risk continues to be reflected in oil prices.

The strategic waterway plays a crucial role in global energy markets, carrying a significant share of worldwide oil and natural gas exports. Any disruption to traffic through the corridor has major implications for global supply chains and energy costs.

Inflation Concerns Continue to Influence Market Expectations

The conflict’s impact has extended beyond energy markets, shaping broader economic expectations.

Higher oil prices have increased concerns that inflation could remain elevated, potentially forcing central banks to maintain restrictive monetary policies for longer than previously anticipated. Investors are therefore balancing expectations of economic resilience against the risk of tighter financial conditions.

Such concerns could affect demand for risk-oriented assets, including equities, if interest rates remain elevated or move higher.

ISM Manufacturing Survey in Focus

Attention later in the session will turn to the latest U.S. manufacturing data from the Institute for Supply Management.

Economists expect the ISM manufacturing purchasing managers’ index to rise to 53.3 in May from 52.7 in April. Any reading above 50 indicates expansion in manufacturing activity.

Investors will also examine the report’s prices-paid component, forecast to increase to 85.3 from 84.6, for additional clues about inflationary trends within the industrial sector.

Nvidia Expands AI Ambitions With New Windows Processor

Nvidia (NASDAQ:NVDA) unveiled a new processor architecture aimed at bringing advanced artificial intelligence capabilities directly to Windows PCs.

Chief Executive Jensen Huang introduced the RTX Spark family of “superchips” during his keynote presentation at the COMPUTEX technology exhibition in Taiwan.

The platform incorporates Nvidia’s N1X processor, developed in partnership with Microsoft and designed alongside Taiwanese semiconductor company MediaTek. The chips are built on Arm-based technology.

Huang said the processors are intended primarily for running AI agents and artificial intelligence workloads locally on personal devices. He also noted that Nvidia worked closely with Microsoft to optimise the software environment supporting the new hardware.

The announcement represents another milestone in Nvidia’s strategy to broaden the reach of its AI technologies beyond data centres and cloud infrastructure, bringing high-performance artificial intelligence capabilities directly to consumers and business users through personal computers.

European equities started the week on a cautious footing after renewed military action between the United States and Iran reduced optimism that a diplomatic breakthrough could soon end the conflict that has persisted for more than three months.

By 07:11 GMT, the pan-European Stoxx 600 was down 0.2%. Germany’s DAX and France’s CAC 40 were little changed, while London’s FTSE 100 slipped 0.3%.

Bond Yields Rise on Inflation Concerns

Government bond yields across the Eurozone moved higher as investors assessed the possibility that rising energy costs could reignite inflationary pressures and potentially prompt a monetary policy response from the European Central Bank.

Germany’s two-year government bond yield, often viewed as a key gauge of interest-rate expectations, rose five basis points to 2.585%. The benchmark German 10-year yield increased four basis points to 2.9757%. Bond yields typically move in the opposite direction to prices.

Oil Extends Gains

Energy markets remained in focus, with Brent crude futures advancing 3.1% to $93.96 per barrel.

Although prices have retreated from recent highs above $100 a barrel, they remain significantly elevated compared with levels seen before the outbreak of hostilities, keeping inflation concerns firmly on investors’ radar.

Fresh Military Action Raises Regional Risks

According to reports from the Associated Press, U.S. forces targeted radar installations and drone-control facilities in Iran after Tehran allegedly shot down an American drone over the weekend.

Iran subsequently confirmed it had carried out further retaliatory strikes, while Kuwait reported intercepting incoming drones and missiles, highlighting the risk of a broader regional escalation.

Strait of Hormuz Remains Key Focus

Market participants continue to closely monitor diplomatic efforts aimed at ending the conflict, which began following a joint U.S.-Israeli offensive against Iran in late February.

Particular attention remains focused on the Strait of Hormuz, a critical shipping route off Iran’s southern coastline. Tanker traffic through the waterway has been severely disrupted during the conflict, affecting global supplies of oil and natural gas.

A reopening of the route is widely viewed as a key objective of any future agreement.

Negotiations Continue Despite Ongoing Hostilities

U.S. President Donald Trump has maintained that Iran is seeking a negotiated settlement, while discussions between the two sides continue over several unresolved issues, including Tehran’s nuclear programme.

Investors remain hopeful that diplomacy can ultimately prevail, although the latest military developments underscore the challenges facing any near-term resolution.