UK equity markets opened the new trading week on a cautious footing, with the FTSE 100 finishing Monday down 0.09% after a turbulent weekend of geopolitical developments.
A volatile period of missile and drone attacks from Iran, followed by US retaliatory strikes against Iranian military targets, kept investor sentiment subdued throughout the session.
Deutsche Bank Research noted that overnight developments pointed toward a tentative de-escalation between the two sides, offering some relief to rattled markets.
“[Overnight] developments suggest a tentative de-escalation, with the US and Iran reportedly agreeing to halt further attacks ahead of renewed technical talks in Doha this week,” Deutsche Bank Research said.
The bank added that “both sides are said to be standing down for now, allowing shipping flows to continue, although disputes over key provisions of the memorandum of understanding — particularly around control and potential costs for transit through Hormuz — mean the situation remains fragile and risks to regional stability persist.”
On the domestic economic front, Bank of England data showed net borrowing of consumer credit by individuals fell to 1.66 billion pounds in May, down from a revised 1.71 billion pounds in April.
Net mortgage approvals for house purchases came in at 56,205 for May, falling well short of both the revised prior month figure of 66,034 and analyst expectations of 63,000.
Britain’s M4 money supply grew just 0.1% month over month in May, missing analyst forecasts of 0.2% and slowing from the 0.2% increase recorded in April, the Bank of England confirmed.
Investors are looking ahead to a busy week of domestic data, including the British Retail Consortium’s shop price inflation figures, current account data, final first-quarter GDP, and S&P Global PMI reports.
In corporate news, British American Tobacco (BATS.L) was among the notable fallers on the blue-chip index, sliding 0.72% after the tobacco giant announced plans to cut 5,500 roles globally, excluding the United States.
The proposed job reductions form part of the company’s Fit2Win transformation programme, which aims to streamline operations across its international business.
BT Group (BT-A.L) bucked the broader trend, closing up 0.51% after announcing a significant deal with US telecoms giant Verizon Communications.
The two companies agreed to combine their international enterprise operations into a 50-50 joint venture, which will carry combined annual revenue of $4 billion.
As part of the arrangement, BT Group will receive an equalization payment of $625 million from Verizon, providing a meaningful cash boost to the British telecom operator.