London stocks are expected to make a subdued start to trading on Tuesday as investors continue to assess the implications of the emerging US-Iran peace agreement, which has helped drive oil prices to multi-month lows and boosted global equity markets.
FTSE 100 futures pointed to a marginally weaker opening, with the index expected to start around 11 points lower despite a broadly positive backdrop for risk assets.
Market sentiment remains supported by signs that the agreement between Washington and Tehran is progressing, with both sides indicating that a formal signing ceremony will take place in Switzerland on Friday.
US President Donald Trump said shipping had resumed through the Strait of Hormuz and declared that the strategically important waterway would be “completely open” by the end of the week. Iranian media reported that multiple oil tankers and cargo vessels had already successfully transited the route.
The prospect of restored energy supplies has continued to pressure oil prices. Brent crude traded below $83 per barrel on Tuesday morning, extending losses from recent highs and helping to ease inflation concerns across global markets.
Analysts believe lower energy prices could support sectors that were negatively impacted by higher fuel costs during the conflict, while also reducing pressure on central banks to tighten monetary policy further.
Wall Street responded positively on Monday, with the Dow Jones Industrial Average gaining 0.9%, the S&P 500 rising 1.7% and the technology-focused Nasdaq Composite surging 3.1%.
Technology stocks continued to benefit from strong momentum surrounding artificial intelligence and SpaceX. Shares in Elon Musk’s aerospace company jumped another 20% after announcing it had raised a record $85.7 billion, pushing its valuation beyond $2.5 trillion and further cementing Musk’s position as the world’s richest individual.
In Asia, trading was more mixed. Japan’s Nikkei advanced 0.5% after the Bank of Japan raised interest rates by 25 basis points to 1.0%, its highest policy rate since 1995. Meanwhile, China’s Shanghai Composite slipped 0.3% and Hong Kong’s Hang Seng fell 1.6%.
Investors will also be monitoring the start of the latest US Federal Reserve policy meeting, alongside German and Eurozone economic sentiment data, for further clues on the outlook for global growth and interest rates.
While lower oil prices and easing geopolitical tensions remain supportive for equities, markets appear to be pausing after recent strong gains as investors await further confirmation that the peace agreement will be fully implemented.
