London stocks are set to open higher on Friday, putting the FTSE 100 on course to round off the week with solid gains as investors welcomed tentative signs of progress in US-Iran negotiations.
Futures indicate the FTSE 100 will open around 46 points higher, or 0.4%, at 10,489.47 after the blue-chip index edged 0.1% higher on Thursday to close at 10,443.47. The benchmark index has now gained 2.4% over the course of the week.
Global market sentiment improved after US Secretary of State Marco Rubio said there were “some good signs” emerging from negotiations between Washington and Tehran, though he cautioned against becoming overly optimistic.
Investors interpreted the comments as a signal that tensions in the Middle East may be easing, helping oil prices retreat and supporting risk appetite across global equity markets.
Brent crude fell sharply to USD104.51 a barrel early Friday from nearly USD108 at Thursday’s London close, easing concerns over inflationary pressure and energy supply disruption linked to the conflict around the Strait of Hormuz.
Asian markets rallied overnight, with Japan’s Nikkei 225 surging 2.8%, Hong Kong’s Hang Seng climbing 1.3% and China’s Shanghai Composite rising 0.8%.
Wall Street also ended higher on Thursday, with the Dow Jones Industrial Average gaining 0.6%, while the S&P 500 and Nasdaq Composite added 0.2% and 0.1% respectively.
Analysts noted that sentiment shifted markedly during Thursday’s session after initial concerns surrounding Iran’s insistence on retaining enriched uranium gave way to optimism that negotiations between the US and Iran may be narrowing key differences.
However, market strategists warned that significant risks remain if shipping through Hormuz is not fully restored in the coming weeks, with concerns that prolonged disruption could tighten global oil inventories further and increase recession risks later in the year.
Currency markets were relatively stable, with sterling strengthening slightly against the dollar to USD1.3429, while US Treasury yields eased as bond markets recovered from recent selling pressure.
Investors will now turn their attention to UK retail sales and public borrowing figures due later Friday morning, alongside German GDP data and Canadian inflation-related releases.
