FTSE 100 Declines Amid Iran-US Negotiation Uncertainty
Stock markets in London experienced significant losses on Thursday, driven by growing doubts over peace talks between the United States and Iran to end the ongoing conflict in the Middle East. The FTSE 100 index closed down 134.67 points, a decline of 1.3%, settling at 9,972.17. Similarly, the FTSE 250 ended 179.38 points lower, down 0.8%, at 21,296.07, while the Aim all-share index fell 10.18 points, or 1.4%, to 719.06.
European and Currency Movements Reflect Broader Concerns
Across European equities, the Cac 40 in Paris closed 1.0% lower, and the Dax 40 in Frankfurt ended 1.5% down. Currency markets also saw notable shifts, with the pound falling to 1.3338 dollars from 1.3377 dollars the previous day. Against the euro, sterling rose slightly to 1.1563 euros from 1.1558 euros, while the euro stood lower at 1.1534 dollars compared to 1.1572 dollars. The dollar traded higher against the yen at 159.65 yen, up from 159.19 yen.
Iran's Counterproposal and Trump's Comments Fuel Tensions
Uncertainty intensified as Iran responded to a 15-point US peace plan through intermediaries, according to reports from news agency Tasnim. Iran submitted a five-point counterproposal demanding an end to aggression, guarantees against future conflicts with Israel or the US, financial compensation, and cessation of hostilities on all fronts, including Israel's actions against Hezbollah and Hamas. President Donald Trump remarked at the White House that US military operations are "extremely" ahead of schedule, originally set for four to six weeks, and criticized Iran as "lousy fighters" but "great negotiators." He noted Iran allowed 10 oil tankers through the Strait of Hormuz as a gesture of seriousness in talks.
Oil Prices Surge and Economic Outlook Darkens
Brent oil prices climbed to 108.80 dollars a barrel from 100.91 dollars, boosting oil majors like BP, which rose 2.8%, and Shell, up 1.2%. The Organisation for Economic Co-operation & Development warned that the conflict has worsened the economic outlook, forecasting UK inflation to average 4% in 2026, up from 2.5%, and then decline to 2.6% in 2027. This positions the UK with the second-highest inflation rate in the G7, behind only the US. The OECD also downgraded UK GDP growth to 0.7% in 2026, 0.5 percentage points lower than prior forecasts, before a rise to 1.3% in 2027.
Market Analysts and Global Stock Reactions
Scope Markets analyst Joshua Mahony commented, "The market rollercoaster continues, with traders waking up to the high likeliness that Trump's five-day extension passes without an agreement. Fears are growing around a potential escalation over the weekend." In New York, stocks were lower, with the Dow Jones Industrial Average down 0.8%, the S&P 500 index 1.1% lower, and the Nasdaq Composite falling 1.5%. US Treasury yields widened, with the 10-year at 4.40% and the 30-year at 4.94%.
Individual Stock Performances in London
On the FTSE 100, Next shares led gains, finishing 6.4% higher after reporting a 21% increase in pre-tax profit to £1.19 billion. Conversely, 3i Group shares sank 18% as it outlined 2026 guidance and plans for its investee Action to open a US store by 2028. On the FTSE 250, Pollen Street closed up 8.9% after assets under management rose 30% to £7.1 billion, while Playtech shares ended 12% lower due to a weaker 2025 performance. On the Aim market, Checkit shares surged 26% after launching a formal sale process amid valuation concerns.
Commodities and Market Outlook
Gold fell to 4,383.70 dollars an ounce from 4,554.59 dollars. The biggest risers on the FTSE 100 included Next, BP, JD Sports Fashion, Diageo, and Shell, while the biggest fallers were 3i Group, Antofagasta, Aviva, Fresnillo, and Segro. Looking ahead, Friday's economic calendar features UK retail sales figures, with additional data from Spain, Ireland, and Canada, and Carnival set to report first-quarter results.
