Global markets managed to absorb new Middle East developments on Tuesday, with hopes of a peace deal helping to steady investor sentiment.
The FTSE 100 closed in positive territory despite choppy trading, and oil prices eased across the session.
This came even after the US struck Iran, framing the action as “self-defence” in an attempt to hit “Iranian boats attempting to emplace mines.”
Iran has now responded with a direct threat against the US military, labelling it a “terrorist” army and accusing Washington of a “blatant violation of the ceasefire.”
Tehran promised to leave “no act of aggression unanswered,” signalling that tensions in the region are far from resolved.
Iran’s supreme leader warned that “America will no longer have a safe haven in the Middle East,” echoing earlier threats from the regime about conflict spreading beyond the region.
The US strikes followed comments from President Donald Trump, who had suggested a ceasefire agreement was close to being finalised.
Trump posted on Saturday that “[The] final aspects and details of the deal are currently being discussed, and will be announced shortly.”
No formal announcement has followed, despite Trump’s claims that the Strait of Hormuz was set to be reopened.
Among the more difficult issues in ongoing negotiations are Iran’s nuclear programme and its reluctance to guarantee unrestricted passage through the Strait of Hormuz.
Markets are now watching closely to see whether the escalating rhetoric translates into further disruption to trade routes or a broader regional conflict.
Other stories drawing attention include legal action launched by Gen Z craze toy maker Jellycat against Next and Hamleys.
The Treasury is also facing scrutiny over plans that could leave vulnerable bank customers facing “higher barriers” to redress under a proposed overhaul.
Security experts have warned of a drone terrorism threat to the Fifa World Cup, while BP’s chair has been ousted over “volcanic” behaviour after less than a year in the role.