(Sharecast News) - London stocks edged lower in early trade on Tuesday after Iran and Isreal said they would end their mutual attacks, and after US President Donald said he was in the "final throes" of reaching a peace deal.
At 0825 BST, the FTSE 100 was down 0.4% at 10,332.59, while Brent crude was 1.3% lower at $93 a barrel and West Texas Intermediate was off 1.7% at $89.67.
Speaking to reporters on his return from an NBA Finals game, Trump said: "We're in the final throes of what will be a very, very good deal". Asked whether it would be matter of days or weeks, the US president said it would take "two or three days".
Trump also said the strait of Hormuz would "open up right away" once the deal is signed.
Kathleen Brooks, research director at XTB, said: "Iran and Israel have both claimed that they will stock attacking each other, and for now the fragile ceasefire between the US and Iran remains in place. The oil price is falling once more on Tuesday, Brent crude is now below $94 per barrel. However, there could be a cap on the downside for the oil price, as we are starting another week whereby the Strait of Hormuz remains closed, and peace talks seem elusive.
"Donald Trump seems confident that a deal will be reached, and he said late on Monday that he does not expect Israel will go back to war with Iran. Although the President has been promising a deal with Iran for months now, we think that the market could be placated by his words, and we may see the oil price remain contained, and stocks continue to recover."
On home shores, the Confederation of British Industry trimmed its UK growth forecasts while sharply revising inflation expectations upwards, on the back of the ongoing war in the Middle East.
Publishing its latest Economic Forecast, the employers' organisation expects GDP to grow by 1.1% in 2026 and 0.9% in 2027. In December, it predicted GDP growth of 1.3% for this year and 1.5% for the next.
Inflation, meanwhile, was forecast to once again mount, rising towards 4% by the end of the year. Prior to the outbreak of the US-Iran war, the CBI had expected inflation to continue falling, reaching 2.6% in 2026 and 2.3% in 2027. Currently standing at 2.8%, the Bank of England's long-term consumer price index target is 2%.
The CBI attributed its more muted outlook to geopolitical tensions in the Middle East and the subsequent spike in energy costs, which it said would weigh on households and businesses throughout 2027.
At the start of December, the CBI forecast two reductions to Bank Rate, one by the end of 2025 and another in early 2026. The central bank reduced the cost of borrowing to 3.75% in December, but since the outbreak of war has left interest rates on hold and some analysts are pricing in at least one rise this year.
The CBI now expects rates to remain on hold through 2027.
Louise Hellem, the CBI's chief economist, said: "What's happening around the world is compounding the UK's low growth story. We saw weak momentum throughout 2025, but if it weren't for the latest global shocks, we could be having a much more positive conversation about the economy today.
"Last year it was tariffs and this year it's the conflict in the Middle East. A world of elevated uncertainty and volatility is no longer the exception, it's the norm - the backdrop against which businesses must operate."
In equity markets, GSK slumped as it agreed to buy Boston-based oncology-focused biopharmaceutical firm Nuvalent for $10.6 bn (7.9bn).
Software-related stocks were also under pressure, with Sage Group, Relx, Experian and LSEG all lower.
On the upside, Bunzl jumped to the top of the FTSE 100 after an upgrade to 'outperform' at BNP Paribas.
Housebuilder Bellway ticked up as it held guidance but said customer demand had moderated in recent weeks after a positive start to the spring selling season. "The outlook beyond the current financial year remains uncertain, reflecting ongoing geopolitical tensions in the Middle East and a less predictable domestic political environment," the company said in a trading update.
Bellway still expects annual underlying operating profit within a range of 320m to 330m.
WPP was the top gainer on the FTSE 250 after an initiation at 'buy' by Berenberg, while Molten Ventures surged on the back of well-received full-year results.
Market Movers
FTSE 100 (UKX) 10,332.59 -0.39%
FTSE 250 (MCX) 23,016.70 0.01%
techMARK (TASX) 5,969.88 -0.44%
FTSE 100 - Risers
Bunzl (BNZL) 2,556.00p 2.73%
IG Group Holdings (IGG) 1,867.00p 1.80%
Spirax Group (SPX) 6,890.00p 1.63%
Admiral Group (ADM) 3,358.00p 1.45%
Legal & General Group (LGEN) 273.00p 1.00%
M&G (MNG) 316.30p 0.96%
Prudential (PRU) 964.20p 0.94%
NATWEST GROUP (NWG) 605.00p 0.87%
Standard Life (SDLF) 772.00p 0.85%
BAE Systems (BA.) 1,944.50p 0.83%
FTSE 100 - Fallers
Relx plc (REL) 2,542.00p -2.11%
GSK (GSK) 1,868.50p -1.65%
Experian (EXPN) 2,596.00p -1.63%
The Sage Group (SGE) 843.20p -1.62%
AstraZeneca (AZN) 13,562.00p -1.41%
Autotrader Group (AUTO) 462.40p -1.30%
Whitbread (WTB) 2,323.00p -1.19%
Entain (ENT) 565.40p -1.16%
Rentokil Initial (RTO) 440.50p -1.12%
Diageo (DGE) 1,489.50p -0.93%
FTSE 250 - Risers
WPP (WPP) 273.60p 3.93%
Dr. Martens (DOCS) 74.00p 3.50%
Foresight Environmental Infrastructure Limited (FGEN) 82.70p 3.25%
Oxford Nanopore Technologies (ONT) 134.90p 3.06%
AO World (AO.) 93.40p 2.52%
THG (THG) 32.42p 2.47%
Henderson Far East Income Ltd. (HFEL) 267.00p 2.30%
Abrdn (ABDN) 243.20p 2.28%
Close Brothers Group (CBG) 456.00p 1.69%
Fidelity China Special Situations (FCSS) 282.50p 1.62%
FTSE 250 - Fallers
Pagegroup (PAGE) 121.00p -3.06%
Frasers Group (FRAS) 730.00p -2.47%
Vesuvius (VSVS) 437.80p -2.41%
RHI Magnesita N.V. (DI) (RHIM) 2,735.00p -2.32%
WH Smith (SMWH) 495.00p -2.20%
Hays (HAS) 35.90p -2.08%
Ocado Group (OCDO) 201.40p -2.05%
Playtech (PTEC) 336.40p -2.04%
Baltic Classifieds Group (BCG) 179.80p -1.91%
RTW Biotech Opportunities Ltd (RTW) 2.12p -1.85%
30.39 (0.29%)
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