London open: Stocks rally, oil drops as Trump says peace deal is close

(Sharecast News) - London stocks rallied in early trade on Friday as oil prices fell after Donald Trump said a deal with Iran was close to being agreed, and as investors mulled the latest UK GDP data and eyed the hotly-anticipated SpaceX IPO.

At 0825 BST, the FTSE 100 was up 0.7% at 10,376.86, while Brent crude was down 2% at $88.60 a barrel and West Texas Intermediate was off 1.6% at $86.15.

Sentiment was boosted after the US President called off further strikes on Iran on Thursday and said a peace deal between the two countries could be signed in the coming days.

Trump said: "We just made a great settlement of the war with Iran, and we're going to be subject to finalisation of documents, which should get done over the next few days."

He said a signing ceremony could take place over the weekend, with the documents in a "pretty final shape". He also said the Strait of Hormuz "will officially open as soon as we sign, which could be soon, very soon".

His comments came shortly after the US President said on Truth Social that he would hit Iran "very hard tonight" and take Kharg Island at some point in the near future.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said Trump's comments had given markets "another reason to lean into risk after a tense few sessions".

"It has the feel of a classic 'escalate to de-escalate' playbook," he said. "Still, with the US mid-term elections approaching and the economic stakes rising globally, there is a clear incentive on all sides to find a quick resolution."

As far as the fall in oil prices is concerned, Britzman noted that even if a deal is reached, getting supply back to normal will not be as simple as flicking a switch, with mines in the Strait of Hormuz to clear, idled production fields to restart, and damaged energy infrastructure to repair.

"That means oil markets may be breathing a little easier, but the path back to smoother flows could take us into the latter part of the year," he said.

On home shores, figures released by the Office for National Statistics showed the economy contracted 0.1% on the month in April, in line with expectations.

This followed growth of 0.3% in March and 0.4% in February. The ONS said the decline was driven by a 0.2% fall in services, which was partially offset by a 0.1% rise in construction. Production showed no growth in April.

The ONS said the largest negative contribution to services sector output came from administrative and support service activities, which fell by 2.2%

The second largest negative contribution came from arts, entertainment and recreation, which saw a 4.3% decline. This was driven by a fall of 9.1% in sports activities and amusement and recreation activities, some of which can be attributed to effects from the Middle East conflict, with the cancellation of multiple sporting events in the region affecting the output of UK-based businesses, the ONS said.

In the three months to April, the economy grew 0.7%, following growth of 0.6% in the three months to March and 0.5% in the three months to February.

Matt Britzman said: "The figures leave the economy on course for a much weaker second quarter, and while inflation risks have not disappeared, the loss of momentum makes it easier to argue that the Bank of England will keep rates on hold."

Looking ahead to the rest of the day, investors will turn their attention to the SpaceX IPO.

Ipek Ozkardeskaya, senior analyst at Swissquote, noted the company already made history on Thursday by selling 555.6 million shares priced at $135 each, raising the $75bn that it was looking for and giving it nearly the $1.8 trillion valuation that it was targeting.

"It equals the combined value of the 29 biggest IPOs in US history since 2000 - adjusted for inflation - including Meta, Google, Hilton, Airbnb, DoorDash, Uber, Snowflake and GM," she said. "Yes, it's huge. So today, everyone will be watching SpaceX leave the launchpad."

In equity markets, airlines shot higher as the drop in oil prices eased concerns about fuel costs, with IAG, Wizz and easyJet all up.

Housebuilders also gained, with Persimmon, Barratt, Berkeley and Vistry among the top performers as the GDP data made a rate hike this year less likely.

Infrastructure group Kier rose after saying it had won an extension to continue delivering maintenance and improvements across South West Water's network over the next two years.

GSK advanced as it said its JAK inhibitor momelotinib has been granted orphan drug designation by both the US Food and Drug Administration and the European Medicines Agency for the treatment of VEXAS syndrome, a rare and severe autoinflammatory condition with no approved therapies.

On the downside, energy giants Shell and BP slumped in tandem with oil prices, along with Diversified Energy and Ithaca.

Market Movers

FTSE 100 (UKX) 10,376.86 0.71%

FTSE 250 (MCX) 23,251.89 1.22%

techMARK (TASX) 5,948.67 0.40%

FTSE 100 - Risers

Smurfit Westrock (DI) (SWR) 3,150.00p 7.24%

Antofagasta (ANTO) 4,025.00p 4.49%

International Consolidated Airlines Group SA (CDI) (IAG) 424.50p 4.42%

Fresnillo (FRES) 2,981.00p 4.34%

Persimmon (PSN) 1,063.00p 4.26%

Rolls-Royce Holdings (RR.) 1,302.80p 4.20%

Barratt Redrow (BTRW) 250.90p 4.01%

Berkeley Group Holdings (The) (BKG) 3,440.00p 3.80%

Halma (HLMA) 4,044.00p 3.53%

Whitbread (WTB) 2,390.00p 3.45%

FTSE 100 - Fallers

BP (BP.) 529.00p -3.10%

Shell (SHEL) 3,202.00p -2.37%

BAE Systems (BA.) 1,906.00p -1.67%

Tesco (TSCO) 467.70p -0.83%

Bunzl (BNZL) 2,520.00p -0.78%

British American Tobacco (BATS) 4,567.00p -0.48%

London Stock Exchange Group (LSEG) 8,810.00p -0.43%

Imperial Brands (IMB) 2,789.00p -0.36%

Centrica (CNA) 187.55p -0.29%

The Sage Group (SGE) 802.00p -0.25%

FTSE 250 - Risers

THG (THG) 32.82p 5.86%

Wizz Air Holdings (WIZZ) 1,078.00p 5.17%

Vistry Group (VTY) 245.80p 4.86%

Pan African Resources (PAF) 107.60p 4.46%

Hochschild Mining (HOC) 521.00p 4.45%

Genuit Group (GEN) 269.80p 4.20%

Ibstock (IBST) 95.55p 4.03%

Discoverie Group (DSCV) 705.00p 3.98%

Marshalls (MSLH) 135.30p 3.92%

WPP (WPP) 282.80p 3.91%

FTSE 250 - Fallers

Diversified Energy Company (DI) (DEC) 1,016.00p -4.69%

Ithaca Energy (ITH) 242.50p -4.16%

Aston Martin Lagonda Global Holdings (AML) 40.06p -3.42%

Harbour Energy (HBR) 260.20p -2.55%

Pantheon Infrastructure (PINT) 113.80p -2.07%

Sirius Real Estate Ltd. (SRE) 95.05p -2.01%

Gamma Communications (GAMA) 969.50p -1.78%

Vietnam Enterprise Investments (DI) (VEIL) 747.00p -1.32%

RHI Magnesita N.V. (DI) (RHIM) 2,755.00p -1.25%

Energean (ENOG) 745.00p -0.93%