Global markets are finding their footing after the United States and Iran confirmed a deal to end more than 100 days of conflict in the Middle East.
Stock markets rallied broadly on the news, while oil prices dropped sharply, with Brent crude hitting a three-month low following the announcement.
The FTSE 100 bucked the wider trend of market euphoria, dragged into negative territory by heavy losses from oil giants Shell (LON: SHEL) and BP (LON: BP).
Brent crude continued its downward move on Thursday morning, trading below $83 a barrel as investors assessed the longer-term implications of the agreement.
Asian markets advanced cautiously overnight, reflecting a broader hesitation among investors about the complexities involved in fully implementing the deal.
Neil Wilson, UK investor strategist at Saxo Markets, offered measured expectations for energy markets going forward, warning that relief would be gradual rather than immediate.
Wilson said: “The realisation will dawn on markets that unwinding the Gordian knot of US-Iran relations will take time — energy prices will decline slowly rather than suddenly.”
US President Donald Trump confirmed late on Wednesday that the agreement is “all signed,” with a formal signing ceremony expected to take place in Geneva on Friday.
Trump also noted that the deal does not cover the ongoing conflict between Israel and Lebanon, which has continued to complicate broader regional peace efforts.
He said the US was looking to see if it could “straight out” the Israel-Lebanon situation, though he acknowledged the difficulty of achieving a resolution there.
“It just seems to just never end,” Trump added, reflecting on the persistent nature of the regional conflict.
Trump expressed hopes for a constructive long-term relationship with Iran, but said “if we don’t, we go back to where we started but I don’t think that’s going to be necessary.”
Elsewhere in business news, Rolls-Royce (LON: RR) saw its shares surge after its small modular reactor unit secured a multi-billion pound nuclear contract in Sweden.
Serco (LON: SRP) pushed back against claims by Reform UK figure Zia Yusuf, who accused the FTSE 250 outsourcing firm of being hostile to his political party.