The FTSE 100 closed lower on Monday, weighed down by declines in Marks & Spencer, J Sainsbury, and Shell, as the ongoing stalemate in the Middle East continued to unsettle investors.
The blue-chip index fell 57.99 points, or 0.6%, to close at 10,321.09. The FTSE 250 ended just 3.38 points lower at 22,579.43, while the AIM All-Share dropped 1.22 points, or 0.2%, to 795.18.
Middle East Diplomacy Stalls
Hopes that Iranian Foreign Minister Abbas Araghchi's visit to Islamabad would pave the way for fresh negotiations with the United States were dashed after US President Donald Trump cancelled a planned trip by envoys on Saturday. Trump told Fox News that if Iran wanted talks, "they can come to us, or they can call us."
On Monday, Araghchi visited Moscow for discussions, and Kremlin spokesman Dmitry Peskov said Russia is ready to offer "goodwill or mediation services" in future negotiations between Iran and the US.
Susannah Streeter, chief investment strategist at Wealth Club, noted "a distinct lack of Monday motivation for stocks." She added: "The rug has been pulled by the Trump administration, sending plans for talks over Iran skidding once again... the lack of progress has hit sentiment at the start of the week."
Oil Prices Surge
Brent crude oil traded at $108.92 per barrel on Monday afternoon, up from $105.78 at the time of the London equities close on Friday. The rise in oil prices weighed on companies sensitive to energy costs and contributed to the broader market decline.
Global Markets Mixed
In European equities, the CAC 40 in Paris and the DAX 40 in Frankfurt both ended down 0.2%. In New York, the Dow Jones Industrial Average fell 0.3%, the S&P 500 slipped 0.2%, and the Nasdaq Composite declined 0.3%.
The yield on the US 10-year Treasury remained unchanged at 4.32% on Monday, while the 30-year Treasury yield widened to 4.93% from 4.92% on Friday.
Currency Movements
The pound strengthened to $1.3549 on Monday afternoon from $1.3497 on Friday. Against the euro, sterling rose to €1.1543 from €1.1532. The euro traded higher against the dollar, rising to $1.1733 from $1.1703 on Friday. Against the yen, the dollar weakened to 159.27 yen from 159.55 yen.
Central Bank Meetings in Focus
Central bank meetings dominate financial markets this week, with interest rate decisions expected from Japan, the US, Europe, and the UK. No changes are anticipated.
In the US, Bank of America expects the Federal Reserve to remain "firmly on hold" at its April meeting. "The inflation outlook is arguably as cloudy as it was at the time of the March meeting. Meanwhile, the recent labour data show resilience and potentially some green shoots. The big question around the FOMC statement is whether it will indicate that risks to the policy path are two-sided. We think it won't, but it's a close call. We anticipate only one dissent," BofA said.
In the UK, analysts expect the Bank of England to leave interest rates unchanged at 3.75% amid the Middle East crisis. After months of finely balanced decisions, March saw a decisive 9-0 vote in favour of keeping rates on hold as the inflationary impact of the war unfolds. Another strong vote to hold rates is expected, with analysts seeing a 9-0, 8-1, or 7-2 split in favour of the status quo.
RBC Capital Markets thinks BoE chief economist Huw Pill could be the lone dissenter at the meeting and back a rate increase. Bank of America believes Megan Greene could join Pill in pressing for higher rates.
FTSE 100 Movers
On London's FTSE 100, Marks & Spencer fell 4.8% after Worldpanel data for the 12 weeks to March 29 showed a material slowdown in the UK clothing market to minus 3.8% year-on-year versus minus 1% in the 12 weeks to March 1. JPMorgan analyst Georgina Johanan said while the figures were on a "tougher comparative as the market laps the helpful weather in the prior year," the result is "nevertheless soft." Johanan highlighted a deceleration at M&S, where sales fell 0.5% year-on-year in the reported period from growth of 3.2% in the prior 12 weeks.
Food retailer J Sainsbury declined 3.4%, hit by downgrades from Goldman Sachs and Citi. Goldman Sachs double-downgraded Sainsbury to "sell" from "buy," while Citigroup analysts moved to "neutral" from "buy." Both downgrades followed further reflection upon last week's full-year results, the brokers said. In a research note, Goldman analyst Richard Edwards said that while financial 2026 earnings before interest and tax, and free cash flow, were in line with his expectations, "the outlook from here is likely to be more challenging." Edwards and Citi analyst Elizabeth Moore both reduced earnings forecasts and share price targets for the grocer.
Shell fell 1.7% after it announced the $16.4 billion cash-and-shares acquisition of Canadian energy company ARC Resources. The London-based oil major said the deal is expected to generate double-digit returns, bolstering long-term cash flows, and is accretive to free cash flow per share from 2027 onwards. Under the deal, ARC shareholders will receive C$8.20 in cash and 0.40247 ordinary shares of Shell for each ARC share. This values ARC equity at around $13.6 billion based on Shell's closing price on Friday. In addition, Shell will take on around $2.8 billion in net debt and leases, resulting in an enterprise value of $16.4 billion.
Gold traded lower at $4,677.74 per ounce on Monday, down from $4,718.34 at the same time on Friday.
The biggest risers on the FTSE 100 were Burberry Group, up 25.6p to 1,173.2p; Smith & Nephew, up 24p to 1,182p; Standard Chartered, up 21.4p to 1,763.8p; M&G, up 3.4p to 298p; and IG Group, up 17p to 1,526p.
The biggest fallers were Entain, down 32.6p to 567p; Marks & Spencer, down 16.65p to 330.35p; Endeavour Mining, down 162p to 4,386p; J Sainsbury, down 11.5p to 333p; and Weir Group, down 94p to 2,902p.
Tuesday's Economic Calendar
Tuesday's global economic calendar features an interest rate decision in Japan, UK grocery market share data at 0800 BST, plus US house price figures and the Conference Board consumer confidence report. Tuesday's local corporate calendar includes first-quarter results from oil major BP, lender Barclays, and kitchen supplier Howden Joinery. This article was contributed by Alliance News.
