(Sharecast News) - London stocks were a smidgen higher in early trade on Tuesday as investors mulled the latest on the peace deal between the US and Iran, with policy announcements from the Bank of Japan and Reserve Bank of Australia also in focus.
At 0840 BST, the FTSE 100 was up 0.1% at 10,440.76, while Brent crude was down 0.8% at $82.52 a barrel and West Texas Intermediate was 0.6% lower at $80.24.
Summing up the latest developments in the Middle East conflict, Danske Bank said: "The US-Iran deal is in the spotlight after a series of overnight updates. The agreement has been virtually signed, ending the US naval blockade of Iranian ports, reopening the Strait of Hormuz and launching 60 days of nuclear talks.
"Trump said ships are already moving and Hormuz will be fully open by Friday, though mine clearance will take time. Passage is expected to be toll-free for at least 60 days, with Iran and Oman to manage the strait thereafter. Details remain unclear, and Israel's leadership and Hezbollah's ongoing attacks underscore persistent regional tensions."
Speaking to CNN on Tuesday, US Vice President JD Vance said the memorandum of understanding between the US and Iran is expected to be formally signed in Geneva later this week. He said the agreement was a general, one-and-a-half-page document, with further details still to be negotiated and conceded that a number of issues remain.
"On a number of issues, we are going to have to figure this stuff out during the technical negotiation phase, but what the MOU does is set up a framework whereby the Iranians get the benefits of the bargain by meeting their obligations under the bargain," he told CNN.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Oil prices have steadied in the low $80s, but the market is not treating the reported US-Iran deal as done and dusted just yet. The proposed agreement could reopen the Strait of Hormuz, a vital route for around a fifth of global oil flows, and President Trump has said oil should begin moving freely again once the deal takes effect.
"But with the details still unpublished and the formal signing not expected until Friday, investors are understandably a little cautious."
Away from the Iran war, investors were mulling the latest data out of China, which showed that retail sales fell for the first time in more than three years in May.
According to the National Bureau of Statistics, retail sales fell 0.6%, reversing April's 0.2% uplift and missing consensus for a flat print. It was the first decline since December 2022.
Fixed-asset investment was also sharply lower, falling 4.1%. However, in contrast industrial production rose to 4.5%, up from 4.1% a month earlier and beating market forecasts for 4.3%, while the unemployment rate ticked marginally lower, to 5.1% from 5.2%.
Policy announcements from the Bank of Japan and Reserve Bank of Australia were also in focus.
The BOJ lifted its policy rate from 0.75% to 1% - the highest level since 1995 - as expected. The vote was split 7-1, with Governor Ueda absent due to hospitalisation. Meanwhile, Australia's central bank held interest rates at 4.35% but warned that it was prepared to tighten monetary policy again if inflation persisted.
In equity markets, engine maker Rolls-Royce was the standout gainer on the FTSE 100, closely followed by defence firms BAE Systems and Babcock.
Scottish Mortgage Investment Trust - which has a significant holding in SpaceX - was also a top riser.
On the downside, Rathbones tumbled after saying it expects to incur 60m of additional costs over the next two years as it implements changes to address issues identified in a review of its wealth management business.
In broker note action, Frasers Group was hit by a downgrade to 'underperform' from 'sector perform' at RBC Capital Markets, while Currys was boosted by an upgrade to 'outperform' from 'sector perform' by the same outfit.
Market Movers
FTSE 100 (UKX) 10,440.76 0.10%
FTSE 250 (MCX) 23,328.59 -0.15%
techMARK (TASX) 5,905.00 -0.02%
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 1,391.60p 2.65%
Scottish Mortgage Inv Trust (SMT) 1,475.00p 2.24%
BAE Systems (BA.) 1,863.50p 2.17%
Convatec Group (CTEC) 208.20p 1.76%
Babcock International Group (BAB) 1,052.50p 1.64%
Weir Group (WEIR) 2,480.00p 1.64%
IMI (IMI) 2,978.00p 1.56%
Diploma (DPLM) 7,065.00p 1.51%
Flutter Entertainment (DI) (FLTR) 8,110.00p 1.45%
Metlen Energy & Metals (MTLN) 41.10p 1.08%
FTSE 100 - Fallers
Associated British Foods (ABF) 1,892.00p -1.89%
Pearson (PSON) 1,124.00p -1.32%
St James's Place (STJ) 1,143.00p -1.28%
The Sage Group (SGE) 812.40p -1.28%
British American Tobacco (BATS) 4,545.00p -1.26%
Autotrader Group (AUTO) 465.20p -1.06%
Rentokil Initial (RTO) 443.60p -1.04%
Compass Group 11 (CPG) 33.01p -1.04%
Haleon (HLN) 331.80p -1.01%
Burberry Group (BRBY) 1,139.50p -0.95%
FTSE 250 - Risers
W.A.G Payment Solutions (EWG) 108.80p 6.88%
Shawbrook Group (SHAW) 340.50p 4.78%
Chemring Group (CHG) 513.50p 3.10%
Edinburgh Worldwide Inv Trust (EWI) 287.00p 2.68%
Baillie Gifford US Growth Trust (USA) 335.50p 2.42%
Partners Group Private Equity Limited. (EUR) (PEY) 8.52p 2.40%
Currys (CURY) 153.80p 2.40%
Raspberry PI Holdings (RPI) 879.25p 2.04%
QinetiQ Group (QQ.) 452.00p 1.62%
AO World (AO.) 95.20p 1.49%
FTSE 250 - Fallers
Rathbones Group (RAT) 1,610.00p -15.16%
SDCL Efficiency Income Trust (SEIT) 39.35p -10.87%
Frasers Group (FRAS) 710.00p -4.98%
Pollen Street Group Limited (POLN) 845.00p -3.43%
Diversified Energy Company (DI) (DEC) 975.00p -3.28%
Wickes Group (WIX) 176.60p -2.34%
Trustpilot Group (TRST) 240.20p -1.97%
The Schiehallion Fund Limited NPV (MNTN) 2.12p -1.85%
Greggs (GRG) 1,665.00p -1.77%
WH Smith (SMWH) 428.20p -1.69%
58.24 (0.56%)
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