London close: FTSE surges as oil prices slide on Iran-US ceasefire

(Sharecast News) - London stocks surged on Wednesday as oil prices tumbled, after the US and Iran agreed a two-week ceasefire that includes the reopening of the vital Strait of Hormuz.

The FTSE 100 closed up 2.5% at 10,608.88. Brent crude was down 13.2% at $94.84 a barrel and West Texas Intermediate was 15.8% lower at $95.10.

The mood was lifted after the US, Iran and Israel agreed a two-week ceasefire following mediation by Parkistan, on the condition that Tehran reopens the Strait of Hormuz. News of the ceasefire came less than two hours before the 20:00 ET Tuesday deadline Trump had given Iran to reach a deal or face the "decimation" of its energy and transport infrastructure by the US.

Talks between the US and Iran are due to kick off in Islamabad on Friday after Trump said Tehran's 10-point plan for ending the war was "a workable basis on which to negotiate".

The list of 10 points, published by Iranian state media, includes the lifting of all primary and secondary sanctions on Iran; continued Iranian control over the strait of Hormuz; and recognition of Iran's right to enrich uranium.

It also includes US military withdrawal from the Middle East; an end to attacks on Iran and its allies, including Lebanon; payments of compensation to Iran; the release of frozen Iranian assets; and a UN security council resolution making any deal binding.

Iranian Foreign Minister Abbas Araghchi said on Tuesday that "safe passage through the Strait of Hormuz will be possible" via coordination with Iran's Armed Forces.

A senior Iranian official told Reuters that Iran could open the shipping route on Thursday or Friday ahead of the scheduled peace talks. By late afternoon, however, Iran had reportedly stopped oil tankers passing through the Strait of Hormuz in response to Israel's ongoing strikes against Lebanon.

Kathleen Brooks, research director at XTB, said: "Iran called this a ceasefire violation and said that it would weigh its response to Israel's actions. Iran also threatened to withdraw from the ceasefire if Israeli attacks continued."

Nevertheless, sentiment remained buoyant into the close. Danni Hewson, head of financial analysis at AJ Bell, said: "The FTSE 100 was on course to add roughly �70 billion worth of value on Wednesday as a relief rally on news of a US-Iran ceasefire solidified.

"This represents one of the best days for the index in recent years as a step back from the brink of a major escalation is received with an almost audible outward breath on the part of the market.

"Key features of trading in London included a sharp reversal in the trends we have seen since the end of February as energy stocks and defensive names were among the few to lose ground while industrial names, banks, names linked to the aviation sector, retailers and housebuilders were among those to surge higher. Having plunged earlier, oil prices were holding steady at around the $95 per barrel mark.

"The UK market's gains were replicated on Wall Street and across Europe as expectations for the trajectory of interest rates shifted once again.

"Considerable uncertainty remains however and it will be informative to see if the momentum is maintained once focus turns from news of the ceasefire itself to the progress of talks between the US and Iran and, in particular, the practicalities of resuming shipping at scale through the Strait of Hormuz. Continuing Israeli strikes on Lebanon are another complicating factor.

"Even if a lasting peace agreement is reached, damage to infrastructure and the shutting in of production means ramping up energy exports from the region is not as simple as just turning on a tap. Close attention is likely to be paid to the details of how supplies can be restored and how quickly."

In equity markets, airlines Wizz Air, easyJet and BA and Iberia owner IAG were among the top performers, while miners and housebuilders also racked up strong gains, along with engine maker Rolls-Royce.

Close Brothers rocketed as it said the motor finance redress scheme was set to cost it around �320m, but that this would be "comfortably absorbed" by existing capital resources. It was also broadly in line with its existing provision of �294m.

Gamma Communications rallied, having confirmed after the close on Tuesday that it is in preliminary talks with a number of interested parties about a potential offer.

Oil giants Shell and BP tumbled in tandem with oil prices. Shell was also in focus as it cut its forecast for integrated gas production, reflecting the impact of the Iran war on Qatari volumes.

Defensives such as British Gas owner Centrica and British American Tobacco also lost ground.

Market Movers

FTSE 100 (UKX) 10,608.88 2.51%

FTSE 250 (MCX) 22,434.83 4.07%

techMARK (TASX) 5,892.43 2.90%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 1,278.00p 11.85%

Lion Finance Group (BGEO) 10,790.00p 9.88%

Antofagasta (ANTO) 3,777.00p 9.86%

Standard Chartered (STAN) 1,725.00p 9.64%

Persimmon (PSN) 1,175.00p 8.60%

Spirax Group (SPX) 7,242.00p 8.45%

International Consolidated Airlines Group SA (CDI) (IAG) 389.40p 8.11%

Melrose Industries (MRO) 548.20p 8.08%

Weir Group (WEIR) 3,054.00p 7.84%

Fresnillo (FRES) 3,623.00p 7.60%

FTSE 100 - Fallers

BP (BP.) 562.70p -5.82%

Shell (SHEL) 3,401.00p -4.68%

Centrica (CNA) 213.40p -2.42%

Pearson (PSON) 1,009.00p -0.74%

Admiral Group (ADM) 3,223.00p -0.25%

British American Tobacco (BATS) 4,424.00p -0.14%

Schroders (SDR) 577.50p -0.09%

Haleon (HLN) 368.90p -0.08%

RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 98.64p 0.00%

Beazley (BEZ) 1,271.00p 0.00%

FTSE 250 - Risers

Gamma Communications (GAMA) 854.20p 16.66%

Close Brothers Group (CBG) 440.80p 13.14%

Wizz Air Holdings (WIZZ) 952.50p 10.95%

Bellway (BWY) 2,060.00p 10.57%

Carnival (CCL) 2,074.00p 10.47%

easyJet (EZJ) 392.90p 9.99%

Marshalls (MSLH) 147.90p 9.47%

RHI Magnesita N.V. (DI) (RHIM) 2,610.00p 9.43%

Vesuvius (VSVS) 434.40p 9.31%

Vistry Group (VTY) 358.40p 9.20%

FTSE 250 - Fallers

Diversified Energy Company (DI) (DEC) 1,198.00p -7.42%

Ithaca Energy (ITH) 242.00p -6.20%

Harbour Energy (HBR) 272.00p -6.14%

Energean (ENOG) 831.50p -4.81%

Senior (SNR) 286.50p -1.55%

Tate & Lyle (TATE) 344.30p -1.12%

Oxford Nanopore Technologies (ONT) 114.50p -0.61%

AEP Plantations (AEP) 1,910.00p 0.00%

International Personal Finance (IPF) 246.00p 0.00%

Tami Senior Securitisation 2 Ltd Cls A-2 Mb Fxd Rte Nts 31/12/23 (Reg S) (BP00) 0.00p 0.00%