London stocks are expected to open sharply higher on Monday after the United States and Iran agreed a framework peace deal that could lead to the reopening of the Strait of Hormuz, easing concerns over global energy supplies and boosting investor sentiment.
Futures indicate the FTSE 100 will open around 91 points higher at 10,562.52, extending Friday’s 1.6% gain, which saw the index close at 10,471.72.
The prospect of reduced geopolitical tensions has triggered a broad rally across global markets while sending oil prices lower. Brent crude fell to around $83.48 per barrel on Monday morning, down from $87.00 late Friday and well below the $120 highs reached during the conflict.
US President Donald Trump declared that a peace agreement with Iran was now complete and indicated that the Strait of Hormuz would reopen following the formal signing of the deal. Iranian media also reported that preparations were underway for the reopening of the strategically important shipping route.
The decline in oil prices has boosted expectations that inflation pressures may ease, supporting equity markets and improving the outlook for interest rates.
Asian markets responded positively to the developments, with Japan’s Nikkei 225 surging 4.9% to a record high. China’s Shanghai Composite gained 1.1%, Hong Kong’s Hang Seng rose 0.6%, and Australia’s ASX 200 advanced 1.4%.
Wall Street also finished higher on Friday, with the Dow Jones rising 0.7%, the S&P 500 adding 0.5% and the Nasdaq gaining 0.3%.
Investors will also be watching the continuing fallout from SpaceX’s historic market debut. Shares in the Elon Musk-led company surged almost 20% on their first day of trading, lifting its valuation above $2 trillion and cementing its position among the world’s most valuable listed companies.
On the economic front, attention will focus on industrial production data from the eurozone and the New York Empire State manufacturing survey in the United States.
In the UK, reports suggest the government may ease electric vehicle sales targets following pressure from the automotive industry, while new data from Rightmove showed UK house prices recorded their largest June decline in 14 years, highlighting ongoing challenges within the housing market.
Meanwhile, the UK and Japan announced a major economic partnership expected to generate more than £18 billion in investment, including a £9 billion offshore wind project, underscoring growing economic ties between the two countries.
With geopolitical tensions easing, oil prices retreating and global equities rallying, markets appear set to begin the week on a firmly positive footing.
