FTSE 100 flatlines ahead of Iran-US peace talks

The FTSE 100 closed little changed on Friday ahead of peace talks between the US and Iran this weekend.

“Investors remained cautious as they kept a close eye on developments surrounding the fragile ceasefire between the US, Israel and Iran,” said David Morrison, an analyst at Trade Nation, adding that investors were pausing “to catch their collective breath heading into the weekend”.

The FTSE 100 closed down just 2.95 points at 10,600.53. The FTSE 250 ended up 145.38 points, 0.7%, at 22,351.02, and the AIM All-Share rose 8.13 points, 1.1%, to 777.48.

For the week, the FTSE 100 was 2.3% higher, the FTSE 250 was up 3.1%, and the AIM All-Share climbed 5.3%.

US vice president JD Vance warned Iran not to “play” Washington but said he hoped peace talks set to start in Pakistan would have a “positive” outcome.

“If the Iranians are willing to negotiate in good faith, we’re certainly willing to extend the open hand. If they’re going to try to play us, then they’re going to find the negotiating team is not that receptive,” he said.

Washington and Tehran have agreed to a two-week truce after more than five weeks of war. However, they remain far apart in their public announcements of goals in the peace talks, in which Mr Vance will head the US delegation.

Key sticking points include Iran’s de facto control over the strategic Strait of Hormuz, US demands that Iran give up its stockpile of highly enriched uranium, and Iran’s aim to prevent further US and Israeli attacks.

For equity markets, Barclays analyst Emmanuel Cau thinks the path of least resistance remains higher.

“Having said that, we are hopeful but not naive,” Mr Cau said.

“Hostilities have not completely ceased and upcoming talks in Pakistan will be critical for further progress, which may not be a smooth process. And we note that stocks look somewhat more hopeful of a happy ending than oil, with equity indices now outperforming the pull-back seen in oil futures.”

Mr Cau added it also feels “reasonable” to expect that the oil shock will leave lasting scars on both growth and inflation relative to pre‑war expectations, in particular for Europe.

“So grinding higher may not be all plain sailing,” Mr Cau said.

Brent oil traded lower at 96.14 dollars a barrel on Friday afternoon, down from 97.36 dollars at the time of the equities close in London on Thursday.

In European equities on Friday, the CAC 40 in Paris closed up 0.4%, while the DAX 40 in Frankfurt rose 0.3%.

In New York, markets were mixed. The Dow Jones Industrial Average was down 0.2%, while the S&P 500 was 0.3% higher, and the Nasdaq Composite was up 0.8%.

The yield on the US 10-year Treasury was flat at 4.30% on Friday. The yield on the US 30-year Treasury stretched to 4.90% on Friday from 4.89% on Thursday.

Investors were also weighing US inflation figures, which showed the impact of the Middle East crisis.

Data published by the US Bureau of Labour Statistics on Friday showed the US consumer price index inflation rate accelerated to 3.3% in March, in line with the FXStreet-cited consensus, from 2.4% in February.

The index for energy rose 10.9% in March, the largest monthly increase in the index since September 2005.

The petrol index increased 21.2% over the month, the largest monthly increase since the series was first published in 1967, which accounted for nearly three-quarters of the monthly all-items increase.

Core inflation, excluding food and energy, was up 2.6% on-year in March, higher than 2.5% in February, but below the consensus of 2.7%.

Analysts took encouragement from the softer-than-expected core inflation figure.

“Gasoline price hikes prompted a jump in headline inflation, but core pressures were more benign than feared. We have much greater confidence that inflation will be transitory this time around, given the lack of demand impetus and weaker corporate pricing power versus 2022,” analysts at ING said.

Arielle Ingrassia, associate director at wealth manager Evelyn Partners, agreed: “For now, this looks like an energy-led reacceleration with contained spillovers, rather than a fully entrenched second-round inflation dynamic.

“However, if energy prices remain elevated, the risk is that these effects broaden over time through costs, pricing and ultimately inflation expectations.”

The pound rose to 1.3472 dollars on Friday afternoon from 1.3437 dollars on Thursday. Against the euro, sterling ebbed to 1.1482 euros from 1.1484 euros.

The euro stood higher against the greenback at 1.1735 dollars from 1.1705 dollars. Against the yen, the dollar was trading higher at 159.10 yen compared to 158.97 yen.

On London’s FTSE 100, Convatec led the risers, up 4.5%, after Thursday’s capital markets day.

Panmure Liberum said there was a “palpable sense of confidence” at what it called an “impressive” CMD. Goldman Sachs, meanwhile, said it came away from the CMD with a “broadly positive impression and increased confidence” in medium-term financial targets.

Burberry rose 2.1% after Italian peer Brunello Cucinelli reported stronger-than-expected first-quarter results, while a higher copper price gave Antofagasta, up 3.0%, a boost ahead of next week’s production figures.

Oil majors BP and Shell, down 1.1% and 0.8% respectively, were on the back foot amid the easing oil price, while hopes for peace in the Middle East and Ukraine sent defence manufacturers BAE Systems and Babcock International down 3.3% and 1.8%.

On the FTSE 250, AO World jumped 7.0% as it forecast profit in line with previously upgraded guidance, “despite material cost headwinds”.

But B&M European Value Retail fell 4.6%, after it said interim chief financial officer Helen Cowing has stepped down from her role, having only held the position since December 1.

Cowing, formerly interim CFO at Mobico Group, had replaced Mike Schmidt, who stepped down in the wake of an accounting error.

The company said group financial controller Peter Waterhouse has been appointed as interim CFO with immediate effect.

JPMorgan analyst Borja Olcese noted that Waterhouse will be B&M’s third CFO in three years, after a chief executive change last year as well.

“This sequence of key management change needs to be regarded in the context of several profit warnings (three material cuts to FY26 profit outlook in a matter of four months).

“Altogether, the sequence of events seems concerning to us, and suggests risk of further kitchen sinking – we note weak company fundamentals persist,” the analyst added.

Gold traded at 4,775.63 dollars an ounce on Friday, down from 4,791.50 dollars at the same time on Thursday.

The biggest risers on the FTSE 100 were Convatec, up 10.0p at 234.0p, Endeavour Mining, up 146.0p at 4,902.0p, Antofagasta, up 111.0p at 3,788.0p, Kingfisher, up 8.1p at 308.2p and Burberry, up 24.0p at 1,157.4p.

The biggest fallers on the FTSE 100 were Metlen Energy & Metals, down 3.1p at 32.2p, BAE Systems, down 75.0p at 2,194.0p, Sage Group, down 18.2p at 817.6p, Hiscox, down 30.0p at 1,577.0p and Compass, down 0.5p at 27.5p.

Monday’s global economic calendar has the US existing home sales figures.

Monday’s domestic corporate calendar has a trading statement from London-based money transfer services provider, Wise.

Contributed by Alliance News