Category: Market Summary

European stock markets posted modest gains on Monday as investors assessed the outcome of the first round of diplomatic discussions between the United States and Iran, while also keeping an eye on political uncertainty in the United Kingdom following reports that Prime Minister Keir Starmer could step down.

The pan-European STOXX 600 index rose 0.1% at the open. Germany’s DAX traded broadly flat, while France’s CAC 40 added 0.1%. Italy’s FTSE MIB moved slightly lower, slipping 0.1%.

UK Political Uncertainty Caps Market Moves

In London, the FTSE 100 traded little changed as investors awaited further clarity from Downing Street.

Market sentiment remained cautious after reports suggested that Starmer could resign following a parliamentary election victory secured by his internal rival, Andy Burnham. Despite the headlines, investors largely refrained from making significant moves until official confirmation emerged.

ECB Comments in Focus

Attention also turned to the European Central Bank, with speeches from President Christine Lagarde and Chief Economist Philip Lane scheduled later in the session.

Investors are looking for fresh insight into the ECB’s policy outlook, particularly after the recent interest-rate increase linked to inflationary pressures stemming from geopolitical tensions.

With signs that conflict in the Middle East may be easing, traders are eager to understand how policymakers intend to balance inflation risks against the need to support economic growth.

Markets Navigate Mixed Signals from Middle East

The geopolitical backdrop remains a key driver of market sentiment.

European equities reached record highs last week after Washington and Tehran agreed to a landmark peace deal that reopened the Strait of Hormuz, one of the world’s most important energy shipping routes.

However, uncertainty quickly returned after conflicting reports emerged regarding the status of the waterway. Iranian officials claimed the Strait had been closed again, while shipping data suggested commercial traffic continued to move through the region.

The situation became more complex as U.S. and Iranian negotiators resumed discussions in Switzerland. At the same time, U.S. President Donald Trump warned of possible new military action against Iran, citing ongoing tensions involving Hezbollah in Lebanon.

Iranian negotiators, meanwhile, indicated that meaningful progress was being achieved during the talks, although the absence of concrete details left investors cautious.

Focus Shifts Back to Fundamentals

Market observers noted that the strong rally seen across Europe in recent sessions may begin to lose momentum as investor attention gradually shifts away from geopolitical developments and back towards corporate earnings, economic fundamentals and market valuations.

Later in the day, investors were also due to receive the latest eurozone consumer confidence figures for June, providing another gauge of economic sentiment across the region.

Notable Movers

Among individual stocks, easyJet (LSE:EZJ) advanced 3% after rejecting a third takeover proposal from investment firm Castlelake.

Babcock International (LSE:BAB) fell nearly 4% after reporting pre-tax profit below analyst expectations.

Elsewhere, BioArctic (TG:B9A) surged 8% following the announcement of a collaboration agreement with Eli Lilly, boosting investor optimism about the company’s future growth prospects.

UK equities traded largely unchanged on Monday after Prime Minister Keir Starmer announced his resignation, setting in motion a contest to choose a new Labour leader, while investors remained focused on developments in U.S.-Iran negotiations and their implications for global markets.

The FTSE 100 slipped 0.03% by 08:47 GMT, while Germany’s DAX declined 0.27% and France’s CAC 40 eased 0.42%. Sterling weakened 0.25% against the U.S. dollar to 1.3201.

Starmer Announces Resignation

Keir Starmer confirmed he would step down as both Prime Minister and Labour Party leader, stating that he had informed the King of his decision and requested that Labour’s National Executive Committee begin the process of selecting a successor. Nominations for the leadership contest are expected to open on 9 July.

Speaking outside Downing Street, Starmer defended his time in office, highlighting what he described as the fastest reduction in NHS waiting lists in 17 years and the largest improvement in workers’ and renters’ rights “in a generation.”

Attention has quickly turned to Greater Manchester Mayor Andy Burnham, who is widely regarded as the leading candidate to succeed Starmer following his strong performance in the recent Makerfield by-election.

Investors Focus on Iran Talks Rather Than UK Politics

Despite the political developments, market reaction remained limited as investors continued to place greater emphasis on international developments, particularly negotiations between the United States and Iran.

According to Andreas Lipkow, chief market analyst at CMC Markets, investors were “continuing to place greater weight on developments in US-Iran negotiations than on domestic political noise. That suggests markets remain primarily focused on the outlook for energy prices and global risk sentiment rather than near-term uncertainty in Westminster.”

Diplomatic efforts involving mediators from Qatar and Pakistan reportedly made progress, including the establishment of a new High-Level Committee and a dedicated communication channel aimed at ensuring safe navigation through the Strait of Hormuz.

Although comments from U.S. President Donald Trump briefly disrupted discussions over the weekend, negotiations subsequently resumed. Analysts at Jefferies said they remain “optimistic that a deal will be reached,” even if the current 60-day truce period needs to be extended.

Oil Falls as Hormuz Concerns Ease

Oil prices moved lower as hopes for uninterrupted shipping through the Strait of Hormuz reduced geopolitical risk premiums.

WTI crude declined 0.70% to $75.32 per barrel, while Brent crude fell 1.64% to $78.72 per barrel.

Jefferies noted that as long as oil remains around the $75 level, “risk sentiment should remain well-supported,” adding that it has increased exposure to risk assets on expectations that the truce will continue.

Gold moved in the opposite direction, with investors continuing to seek exposure to safe-haven assets. Spot gold rose 0.80% to $4,193.38 an ounce, while gold futures advanced 0.92% to $4,217.82.

UK Corporate Round-Up

easyJet Rejects Third Takeover Proposal

easyJet (LSE:EZJ) rejected a third takeover approach from U.S. investment firm Castlelake, which valued the airline at 625 pence per share. The board concluded that the proposal did not adequately reflect the company’s value and future prospects.

Ocado Addresses Succession Speculation

Ocado Group (LSE:OCDO) confirmed that chief executive Tim Steiner and the board continue to undertake long-term succession planning and engage with potential candidates. The statement followed a media report suggesting that Vonage chief executive Niklas Heuveldop had been approached regarding the role.

Babcock Reports Profit Impact From Type 31 Charge

Babcock International (LSE:BAB) reported that annual underlying operating profit fell 19% to £293.3 million after the company recorded a £140 million charge related to its Type 31 frigate programme for the Royal Navy. Despite the impact, management maintained confidence in the group’s longer-term outlook, supported by strong demand across defence and nuclear markets.

FTSE 100 steadies as Marks Electrical reports weaker revenue and Union Jack Oil abandons Oklahoma well. Brent crude slips while gold rises.

Market Overview

UK and European markets were broadly steady at the open, with the FTSE 100 edging 0.01 per cent higher to 10,400.46, while the Euronext 100 slipped 0.02 per cent and Germany’s DAX gained 0.19 per cent. In the US, overnight sentiment was stronger, with the Nasdaq and the S&P 500 both closing higher. Investors continued to assess political uncertainty in the UK, Federal Reserve policy expectations and developments in global trade and geopolitical relations. Oil markets remained in focus as supply flows through the Strait of Hormuz improved, easing some concerns over disruption.

Commodity markets presented a mixed picture. Gold and copper moved higher, while Brent crude and natural gas eased. Bitcoin was unchanged against sterling. Sterling weakened against the Swiss franc and Australian dollar but strengthened modestly against the euro and US dollar, reflecting a cautious risk environment and ongoing macroeconomic uncertainty.

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Market Numbers

FTSE 100: Up (+0.01%), 10,400.46

Euronext 100: Down (-0.02%), 1,930.50

DAX: Up (+0.19%), 25,075.33

NASDAQ: Up, 26,517.93

S&P 500: Up, 7,500.58

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In the Headlines

Revenue Decline – Marks Electrical (LSE:MRK)

Marks Electrical reported an 8 per cent fall in FY26 revenue as the online electricals retailer reduced lower-margin marketplace activity and focused on its core direct sales operations. The results highlight continued pressure on consumer spending and margins across the retail sector.

Well Abandoned – Union Jack Oil (LSE:UJO)

Union Jack Oil said it will abandon the Crossroads well in Oklahoma after testing failed to deliver commercial hydrocarbon flows. The outcome is a setback for the company’s US growth ambitions and removes a potential near-term production catalyst.

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Currencies (vs GBP)

USD: Up (+0.01%), $1.3202

CHF: Down (-0.02%), Fr.1.0627

EUR: Up (+0.01%), €1.1521

JPY: Up (+0.01%), ¥212.944

AUD: Down (-0.02%), $1.8825

Bitcoin (BTC/GBP): Up, £47,647

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Commodities

Copper: Up

Gold: Up

Brent Crude: Down

Natural Gas: Down

Investors Reassess Geopolitical Risks Following Diplomatic Setback

U.S. equity futures traded slightly lower on Friday as investors digested the cancellation of planned talks between the United States and Iran, casting doubt over the durability of the recently announced peace framework.

Oil prices continued to move lower as markets focused on the prospect of increased global crude supplies following the planned reopening of the Strait of Hormuz. However, the abrupt halt to diplomatic discussions reminded investors that tensions between Washington and Tehran remain unresolved.

Wall Street Ends Strong Session Before Holiday Closure

U.S. financial markets were closed on Friday for the Juneteenth holiday, following a positive session on Thursday.

The previous day’s gains came after investors looked past the Federal Reserve’s latest policy meeting, despite indications that policymakers may still consider raising interest rates later this year. The S&P 500 climbed 1.1%, the Dow Jones Industrial Average added 0.1%, and the Nasdaq Composite advanced 1.9%.

Technology shares outperformed, with semiconductor companies benefiting from news that Apple would collaborate with Intel on domestic chip production in the United States.

Laurence Booth, Global Head of Markets at CMC Markets, warned that investors may be underestimating ongoing geopolitical risks.

He said: “A key question for investors is whether markets have become too comfortable with the assumption that geopolitical risks are fading.”

He added: “Recent gains in equities have been supported by expectations of de-escalation, but stalled negotiations suggest the underlying issues remain unresolved. That leaves markets vulnerable to any deterioration in sentiment heading into next week.”

Diplomatic Progress Faces New Challenges

Plans for fresh negotiations between U.S. and Iranian officials were unexpectedly shelved after U.S. Vice President JD Vance withdrew from scheduled talks in Switzerland.

The meeting was expected to focus on the implementation of the recently agreed framework and address issues surrounding Iran’s nuclear programme. Iranian reports suggested that Tehran wants further proof that the United States is honouring its commitments before returning to the negotiating table.

Although the cancellation does not necessarily signal a breakdown in relations, it has raised concerns that tensions could flare up again, with implications for energy markets and global inflation.

Crude Prices Continue Weekly Slide

Oil markets remained under pressure, with Brent crude falling 1.1% to $79.01 a barrel and West Texas Intermediate declining 0.7% to $76.05.

Both contracts are on track to record weekly losses of almost 10%, reflecting expectations that additional supply could return to global markets as restrictions around the Strait of Hormuz are gradually eased.

ASML Rejects U.S. Concerns Over China

Shares in ASML (EU:ASML) slipped after reports that U.S. officials had questioned whether one of the company’s advanced lithography systems was operating in China despite export controls.

The Dutch semiconductor equipment manufacturer denied the claims, stating that it has never delivered an EUV machine to China.

The development highlights the continuing technology dispute between Washington and Beijing as restrictions on advanced semiconductor equipment remain firmly in place.

Pentagon May Seek Additional Funding

The Wall Street Journal reported that the Pentagon is seeking roughly $80 billion in additional funding to cover costs associated with the Iran conflict and other strategic priorities.

The proposed package could also include support for agricultural programmes and disaster recovery efforts. Investors will be monitoring developments closely given the potential implications for government borrowing, fiscal policy and interest-rate expectations.

Markets Hold Steady Amid Fresh Questions Over Middle East Diplomacy

European equities traded with little direction on Friday as investors balanced uncertainty surrounding the Middle East against concerns that U.S. interest rates may remain higher for longer.

The pan-European STOXX 600 was broadly unchanged in early trading, while Germany’s DAX gained 0.2%. France’s CAC 40 and Italy’s FTSE MIB each advanced 0.3%.

Investor sentiment was affected after U.S. Vice President JD Vance withdrew from a planned visit to Switzerland, where talks with Iranian representatives were expected to begin on implementing the recently announced 14-point agreement between Washington and Tehran.

Peace Deal Supports Weekly Gains, but Hawkish Fed Caps Momentum

Despite Friday’s cautious tone, European markets remain on track for a second consecutive week of gains. Earlier optimism was driven by the breakthrough agreement between the United States and Iran, which paved the way for the reopening of the Strait of Hormuz and triggered a sharp decline in oil prices.

The fall in crude eased fears of a prolonged inflation shock, offering relief to European equities that had come under pressure during the height of geopolitical tensions.

However, the STOXX 600’s weekly advance of around 0.6% has lagged behind the gains seen in Asian markets, where major indices have risen by more than 1%.

A key reason for the more subdued performance has been the Federal Reserve’s unexpectedly hawkish stance. With several policymakers signalling the possibility of another interest-rate increase before year-end, investors have rapidly adjusted expectations, with markets now pricing in roughly an 80% probability of a rate hike in October.

Dan Coatsworth, head of markets at AJ Bell, said: “The Fed struck a surprisingly hawkish tone on rates and spooked investors, as new chair Kevin Warsh indicated he would give less direction on future policy than had previously been the case.”

He added: “This means more of the uncertainty which markets typically hate.”

FTSE 100 Lags as Energy Stocks Retreat

London’s FTSE 100 underperformed its European peers and remained on course for a weekly decline of around 0.9%, weighed down by weakness in major energy companies including BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL) following the drop in crude prices. The index opened 0.1% lower on Friday.

UK politics also attracted attention after Labour mayor Andy Burnham secured a parliamentary seat, a development viewed by some market participants as increasing the possibility of a future leadership challenge to Prime Minister Keir Starmer.

Airlines Benefit From Lower Fuel Costs

Airline stocks were among the strongest performers during the week as falling oil prices improved the outlook for operating costs. Shares in Lufthansa (TG:LHA), Air France-KLM (EU:AF) and British Airways owner ICAG (LSE:IAG) all advanced as investors welcomed the prospect of lower fuel expenses.

London stocks traded modestly lower on Friday as investors weighed stronger-than-expected retail sales figures against deteriorating public finances, renewed political uncertainty and concerns over developments in the Middle East. While consumer spending showed encouraging signs of recovery, market sentiment remained cautious amid a widening government borrowing gap and speculation surrounding the future leadership of the Labour Party.

Official figures showed UK retail sales volumes increased by 1.2% in May, comfortably ahead of forecasts for a 0.5% rise and reversing April’s 1% decline. On an annual basis, sales volumes climbed 3.2%, surpassing expectations of 1.9%. Despite the upbeat data, attention quickly shifted to public sector borrowing figures, which revealed borrowing of £23.3 billion in May, £5.6 billion above official forecasts and the second-highest May figure on record.

Debt servicing costs also surged, with interest payments reaching a record £11.7 billion, driven by higher inflation-linked gilt costs. Borrowing for the financial year to date has reached £46.3 billion, exceeding projections by £7.7 billion, while public sector net debt climbed to 95.1% of GDP, its highest level in decades.

The FTSE 100 underperformed its European counterparts, slipping 0.12%, while Germany’s DAX and France’s CAC 40 posted modest gains. Sterling weakened slightly against the US dollar as investors reacted to growing political uncertainty following Andy Burnham’s victory in the Makerfield by-election. The result has fuelled speculation over Labour Party leadership dynamics, adding another layer of uncertainty to the domestic outlook.

International developments also remained in focus. Concerns resurfaced over the durability of the recently announced US-Iran framework after planned talks in Switzerland were postponed and diplomatic tensions increased. Markets also monitored developments around the Strait of Hormuz, where Iranian authorities introduced new shipping oversight measures aimed at maintaining trade flows through one of the world’s most important energy corridors.

Commodity markets reflected the changing risk environment. Oil prices moved higher, with Brent crude and WTI both advancing as traders assessed geopolitical risks and the outlook for global supply. Gold prices, however, retreated sharply as demand for traditional safe-haven assets eased.

UK Corporate Highlights

PPHE Hotel Group Shares Fall After Takeover Proposal Collapses

PPHE Hotel Group (LSE:PPH) came under pressure after confirming that a proposed £920.9 million takeover approach from Fattal Hotel Group will not proceed following opposition from a major shareholder. The company said it remains engaged in its broader strategic review process and disclosed that another preliminary expression of interest has been received from a separate party.

Barratt Redrow Appoints New Finance Chief

Barratt Redrow (LSE:BTRW) announced the appointment of former Britvic finance chief Rebecca Napier as Chief Financial Officer and Executive Director, effective 3 August. The housebuilder said her experience across finance, strategy and capital markets will support the business as it completes the integration of Barratt and Redrow and focuses on delivering long-term value.

U.S. equity futures traded higher on Thursday, pointing to a recovery on Wall Street after stocks retreated sharply in the previous session following the Federal Reserve’s latest policy announcement.

Investor sentiment improved after the United States and Iran signed a preliminary agreement aimed at ending months of conflict, easing concerns over energy supplies and the potential impact on global economic growth.

Peace Framework Signals Progress in Middle East

President Donald Trump and Iranian President Masoud Pezeshkian formally approved a memorandum of understanding that lays the groundwork for negotiations on a permanent peace settlement.

The agreement takes effect immediately and includes provisions for the reopening of the Strait of Hormuz and the lifting of U.S. naval restrictions on Iranian ports.

Under the 14-point framework, officials from both countries are expected to begin detailed negotiations over the next 60 days.

Crude Prices Continue to Retreat

Oil markets reacted positively to the prospect of improved supply flows, with crude prices extending recent losses.

Futures moved closer to levels seen before the outbreak of hostilities in late February, helping ease fears of energy-driven inflation.

“That has huge significance for inflation and interest rates, as well as business, consumer and investor sentiment,” said Russ Mould, investment director at AJ Bell. “It takes the pressure off industries and households and is hugely positive for global economic growth.”

Intel Jumps After Trump Comments

Among notable movers, Intel (NASDAQ:INTC) surged 8.5% in premarket trading.

The gain followed comments from Trump indicating that Apple (NASDAQ:AAPL) had agreed to work with Intel on chip design and manufacturing projects in the United States.

The development fueled optimism across the semiconductor sector and helped support broader market sentiment.

Federal Reserve Sparks Market Volatility

Markets struggled on Wednesday after the Federal Reserve kept interest rates unchanged but adopted a more cautious stance on inflation.

The Dow Jones Industrial Average fell 507.12 points, or 1%, to 51,492.55. The S&P 500 declined 91.25 points, or 1.2%, to 7,420.10, while the Nasdaq dropped 354.69 points, or 1.3%, to 26,021.66.

Policymakers Leave Door Open to Further Tightening

The Fed maintained its benchmark rate at 3.5% to 3.75%, a move widely anticipated by markets.

However, updated forecasts suggested policymakers now see a greater possibility that rates could move higher before the end of the year.

The median projection points to rates reaching 3.8% by the end of 2026, a notable shift from earlier expectations for lower borrowing costs.

Strong Retail Data Highlights Consumer Resilience

Economic data released before the Fed decision painted a relatively positive picture of consumer spending.

The Commerce Department reported that retail sales rose 0.9% in May, following an upwardly revised 0.4% increase in April.

The reading comfortably exceeded forecasts for a 0.5% gain.

Software and Transport Sectors Lead Declines

Technology shares were among the weakest performers during Wednesday’s session.

The Dow Jones U.S. Software Index fell 3.2%, while transportation stocks also came under heavy selling pressure, pushing the Dow Jones Transportation Average down 3%.

Retailers, oil service companies, gold producers and commercial real estate stocks also lost ground, although semiconductor and brokerage shares showed relative strength.

European equities traded with little overall direction on Thursday as investors assessed the latest policy signals from major central banks, including the U.S. Federal Reserve, which left interest rates unchanged but indicated that further tightening remains possible later this year.

The Fed’s updated economic projections suggested policymakers still see scope for at least one additional rate increase, prompting investors to reassess the outlook for global monetary policy.

Central Banks Hold Rates Steady

In Europe, the Swiss National Bank kept its benchmark rate at 0%, despite recent inflationary pressures, while the Bank of England also left borrowing costs unchanged at 3.75%.

Economic data from the UK provided some support for sentiment after figures showed the unemployment rate eased to 4.9% in the three months to April, down from 5.0% in the previous period. Payroll employment also returned to growth following three consecutive monthly declines.

Major Indexes Trade Mixed

Market performance across the region was uneven.

The UK’s FTSE 100 declined 0.9%, pressured by weakness in energy and consumer stocks. France’s CAC 40 traded around flat levels, while Germany’s DAX outperformed with a gain of 0.2%.

L’Oréal Falls After Indian Acquisition Deal

Among individual stocks, L’Oreal (EU:OR) moved lower after announcing an agreement to acquire a controlling stake in Indian personal care company Innovist.

Investors appeared cautious about the transaction as the cosmetics group continues to expand its presence in fast-growing international markets.

Tesco Slides on Slower Sales Growth

Tesco (LSE:TSCO) was among the weakest performers in London after the retailer reported a slowdown in first-quarter sales growth.

The update raised concerns about consumer spending trends despite the company’s continued focus on value and customer retention initiatives.

Lower Oil Prices Weigh on Energy Stocks

Energy shares came under pressure as easing geopolitical tensions pushed oil prices lower.

Brent crude moved toward the $78-a-barrel level, dragging down major producers including BP Plc (LSE:BP.) and Shell (LSE:SHEL).

The decline in crude prices reflected improving sentiment around global energy supplies and reduced concerns over potential disruptions.

FirstGroup Jumps on Results and Buyback

FirstGroup (LSE:FGP) advanced strongly after the transport operator reported resilient annual results and unveiled a new £100 million share repurchase programme.

Investors welcomed the combination of solid operational performance and additional capital returns to shareholders.

Informa Gains After Revenue Update

Informa (LSE:INF) also posted notable gains after reporting underlying revenue growth of 6.4% in a trading update covering the first five months of the year.

The exhibitions and academic publishing group reaffirmed its full-year outlook, helping to reinforce confidence in its growth trajectory despite broader market uncertainty.

European equities opened cautiously on Thursday as investors weighed the impact of the Federal Reserve’s latest policy signals against easing geopolitical tensions following the recent U.S.-Iran agreement.

The pan-European STOXX 600 slipped 0.2% in early trading. France’s CAC 40, Italy’s FTSE MIB and Spain’s IBEX 35 traded little changed, while Germany’s DAX outperformed with a gain of 0.3%.

Fed Message Overshadows Geopolitical Relief

Markets had initially been positioned for a broader relief rally after the United States and Iran reached a landmark agreement that helped ease concerns over global energy supplies and trade routes.

The prospect of improved stability in the Middle East pushed oil prices lower and initially supported investor sentiment.

However, enthusiasm faded after the Federal Reserve delivered a firmer-than-expected policy message despite leaving interest rates unchanged.

Investors interpreted the central bank’s comments as a signal that monetary policy could remain restrictive for longer than previously anticipated.

Rate Expectations Shift Higher

Financial markets moved quickly to adjust expectations following the Fed’s latest guidance.

According to CME’s FedWatch tool, the probability of an interest rate increase by December rose sharply to 85%, compared with roughly 42% before the central bank’s meeting.

The reassessment of future U.S. monetary policy helped dampen risk appetite globally and contributed to a more cautious tone across European equity markets.

Energy Stocks Weigh on Major Indexes

The decline in oil prices added further pressure to European markets, particularly within the energy sector.

Shares of BP Plc (LSE:BP.) and TotalEnergies SE (EU:TTE) came under pressure as Brent crude retreated toward key technical support levels.

The weakness in large energy companies weighed on both the FTSE 100 and CAC 40, limiting broader market performance despite strength in other sectors.

Focus Turns to Central Banks

In the UK, the FTSE 100 fell 0.5% as investors awaited the Bank of England’s latest monetary policy decision.

While policymakers are widely expected to leave interest rates unchanged, market participants are expected to focus closely on comments from Governor Andrew Bailey for indications on the future direction of UK monetary policy.

Attention will also remain on the European Central Bank later in the day, with several policymakers, including Chief Economist Philip Lane, scheduled to speak.

Investors will be watching for any clues regarding the future path of interest rates across the eurozone.

Mixed Performance Among Individual Stocks

Among notable movers, Tesco (LSE:TSCO) declined 2.5% after the retailer reported slower sales growth in its latest trading update.

In contrast, Informa (LSE:INF) gained 2% after reaffirming its outlook and signalling stronger growth prospects for the coming years.

The mixed corporate performances reflected a market that remains highly sensitive to both macroeconomic developments and company-specific news.

UK equities moved lower on Thursday as investors awaited the latest interest rate decision from the Bank of England, while a sharp decline in crude oil prices weighed heavily on energy stocks.

The FTSE 100 was down 0.54% in early trading, lagging broader European markets. By contrast, Germany’s DAX gained 0.46% and France’s CAC 40 rose 0.25% as investors reacted positively to signs of improving stability in the Middle East.

Labour Market Remains Resilient

Fresh economic data painted a mixed picture of the UK labour market ahead of the central bank’s policy announcement.

Average weekly earnings excluding bonuses remained at an annual growth rate of 3.4% in the three months to April, exceeding economists’ expectations of 3.2%. Meanwhile, the unemployment rate unexpectedly fell to 4.9% from 5.0%.

Total earnings including bonuses increased 4.4% year-on-year, suggesting wage pressures remain relatively firm despite broader signs of economic moderation.

However, other indicators pointed to some cooling in employment conditions. Job vacancies fell by 19,000 to 707,000 during the three months to May, marking the lowest level since early 2021, while the claimant count increased during May.

The figures are likely to leave policymakers balancing concerns about persistent wage growth against evidence of softening labour demand.

Middle East Agreement Pressures Oil Prices

Market sentiment was also influenced by developments in the Middle East after the United States and Iran agreed a 14-point framework aimed at restoring Iranian oil exports and reopening the Strait of Hormuz.

The agreement outlines a pathway toward a broader deal within 60 days, with implementation discussions expected to begin in Switzerland on Friday.

Investors broadly welcomed the development, viewing it as a potential step toward improving energy security and reducing risks to global trade and shipping routes.

The prospect of additional oil supplies returning to international markets pushed energy prices lower.

Brent crude fell 1.5% to $78.35 a barrel, while U.S. benchmark WTI crude declined 2.0% to $75.28 a barrel. Gold moved in the opposite direction, with spot prices rising 1.1% to $4,305.84 per ounce.

Informa Reaffirms Growth Outlook

Among individual stocks, Informa (LSE:INF) traded higher after reiterating its full-year guidance and expressing confidence in stronger growth prospects for 2027.

The events and academic publishing group reported underlying revenue growth of 6.4% during the first five months of 2026, supported by continued strength in its live events business and a recovery from disruption linked to the Iran conflict.

Management maintained its expectation for double-digit growth in adjusted earnings per share this year.

Tesco Maintains Guidance Despite Softer Sales Growth

Tesco (LSE:TSCO) remained in focus after reporting first-quarter UK like-for-like sales growth of 1.8%.

The figure came in below analyst expectations, with the retailer citing ongoing consumer caution and uncertainty linked to geopolitical developments.

Despite the softer sales performance, Tesco maintained its full-year profit outlook and highlighted continued progress across its value-focused strategy, online operations and customer loyalty initiatives.

Investors Await Bank of England Verdict

Attention now turns to the Bank of England’s policy decision, where investors will be looking for clues on the future path of interest rates and the central bank’s assessment of inflation and economic conditions.

With wage growth remaining relatively firm but labour demand showing signs of moderation, markets are likely to scrutinise any changes in tone regarding the outlook for monetary policy over the remainder of the year.