London stocks are expected to open lower on Tuesday, with the FTSE 100 forecast to decline around 47 points as investors assess developments in US-Iran peace negotiations, weakness in American technology shares and the potential implications of the US midterm elections.
Futures indicate the FTSE 100 will open around 0.4% lower at 10,713.93, reversing Monday’s 31.55-point advance, which saw the blue-chip index close at 10,761.33.
Oil prices recovered slightly following Monday’s sharp decline, with Brent crude trading at $106.47 a barrel, compared with $105.09 at the previous London close.
Crude prices had fallen more than 7% on Monday amid growing optimism that diplomatic efforts could bring an end to the eight-month conflict between the United States and Iran.
US President Donald Trump signalled progress in negotiations with Tehran, suggesting that an agreement could be reached as both sides continued discussions aimed at preventing renewed hostilities.
Vice President JD Vance also expressed optimism, confirming that progress had been made while acknowledging that further negotiations were required.
Iran has indicated that it could reopen the strategically important Strait of Hormuz, although any agreement remains subject to conditions relating to the wider conflict.
The potential restoration of shipping through the waterway has raised hopes of improved global energy supplies, following months of disruption that contributed to elevated oil and gas prices.
Wall Street finished mixed on Monday, with the Dow Jones Industrial Average gaining 0.4%, while the S&P 500 declined 0.5% and the technology-heavy Nasdaq Composite fell 1.1%.
Technology shares remained under pressure as investors continued questioning the scale of artificial intelligence infrastructure spending and the potential returns from major investment programmes.
Apple shares dropped 2.8% in after-hours trading despite reporting stronger-than-expected quarterly revenue, supported by robust iPhone sales.
The technology giant reported net income of $30.71 billion for the three months ended 30 September, compared with $27.47 billion a year earlier.
Revenue increased 12% to $114.48 billion, exceeding analyst expectations of approximately $113.6 billion.
However, weaker-than-expected sales in China disappointed investors, overshadowing the company’s stronger overall financial performance.
Asian equity markets delivered a mixed performance on Tuesday, with China’s Shanghai Composite declining 0.9%, while Hong Kong’s Hang Seng gained 0.2%.
Australia’s S&P/ASX 200 advanced 0.3%, while Japan’s Nikkei 225 remained closed for the Culture Day public holiday.
The Reserve Bank of Australia raised interest rates by 25 basis points to 4.85%, marking its second consecutive increase as policymakers responded to persistent inflation.
The decision, supported by six of the central bank’s nine monetary policy board members, followed September’s quarter-point increase.
Australia’s central bank warned that inflation remained elevated and broadly based, with higher fuel and commodity prices contributing to an upward revision in its inflation forecasts.
Investors are also focused on Tuesday’s US midterm elections, which will determine control of Congress for the final two years of President Trump’s second term.
All 435 seats in the House of Representatives are being contested, alongside 35 Senate seats.
Republicans enter the elections defending majorities in both chambers, with the results potentially affecting the administration’s ability to advance its legislative and fiscal priorities.
The outcome could influence expectations for taxation, government spending, energy policy and technology regulation.
In currency markets, sterling eased to $1.3408 against the US dollar, compared with $1.3417 on Monday, while strengthening slightly against the euro to €1.1985.
The euro weakened to $1.1188 against the dollar, while the US currency traded at ¥157.87.
Gold declined to $3,916.41 an ounce, compared with $3,968.02 at Monday’s London close.
Tuesday’s UK corporate calendar includes full-year results from Associated British Foods, the owner of Primark, alongside trading statements from Coca-Cola Europacific Partners, Glanbia, Hiscox and International Workplace Group.
Investors will examine the updates for evidence of changing consumer demand, inflationary pressures and business performance.
The US economic calendar includes factory orders data, providing a further indication of manufacturing activity and investment demand.
The FTSE 100 faces a cautious opening despite growing hopes of a diplomatic breakthrough in the Middle East, with weakness in technology shares and uncertainty surrounding the US elections weighing on sentiment.
Attention will now turn to the outcome of US-Iran negotiations, American election results and the latest UK corporate updates, as investors assess whether easing energy prices can support a broader recovery in global equity markets.
