The FTSE 100 is expected to open broadly flat on Tuesday as investors return from the Summer Bank Holiday, weighing on renewed tensions between the US and Iran alongside fresh UK inflation and global manufacturing data.
Futures indicate London’s blue-chip index will open around 0.6 points higher at 10,824.86, after closing 0.3% higher at 10,824.26 on Friday.
Geopolitical risk returned to the forefront after the US and Iran exchanged fire for the first time in more than a month. President Donald Trump warned Washington would hit Iran “hard” following retaliatory attacks against US military targets in the Middle East.
The latest confrontation followed US strikes on an Iranian island in the Strait of Hormuz, which remains closed after six months of conflict. The US is maintaining a naval counter-blockade of Iranian ports, while diplomatic efforts between Washington and Tehran remain deadlocked.
Oil prices strengthened amid the renewed uncertainty, with Brent crude rising to $90.84 a barrel early Tuesday from $90.33 late Monday. Gold also advanced to $4,443 an ounce.
UK investors are also digesting signs of renewed inflationary pressure. The British Retail Consortium and NielsenIQ said shop price inflation accelerated to 1.5% in August from 0.9% in July, reaching its highest level in two years.
Food inflation increased to 2.8% from 2.2%, while non-food inflation accelerated sharply to 0.9% from 0.2%. Fresh food inflation eased marginally to 3.0%, but ambient food inflation jumped to 2.5% from 1.1%.
Overnight markets offered little support. Wall Street finished Monday lower, with the Dow Jones down 0.7%, S&P 500 off 0.3% and Nasdaq Composite 0.1% lower.
Asian trading was mixed. Japan’s Nikkei 225 slipped 0.1%, China’s Shanghai Composite gained 0.1% and Hong Kong’s Hang Seng fell 1.0%.
Chinese manufacturing provided a more positive signal, with the RatingDog manufacturing PMI rising to 51.5 in August from 50.9 in July, while new orders increased for a 15th consecutive month. A reading above 50 indicates expansion.
Tuesday’s economic calendar includes UK Nationwide house prices alongside manufacturing PMI readings from the UK, Germany, eurozone and US. Eurozone inflation and unemployment figures are also due.
On the corporate front, investors will receive half-year results from Ashtead Technology Holdings, Bunzl and Michelmersh Brick Holdings.
