- FTSE 100 off 43 points to 10,233
- Intertek sinks 7.5% after rejecting revised bid
- Brent crude oil heads above $100/bbl
- Reform takes the lead in early election results
4.52pm: European stocks lag
European stocks lagged as Wall Street hit new highs on Friday amid strong earnings reports and robust labor market data.
The FTSE 100 finished the session down 43 points at 10,233.
“US stock indices powered ahead with several hitting record highs as strong earnings and Friday's positive jobs data offset risks from the war in the Middle East and US consumer sentiment dropping to a record low,” IG chief technical analyst Axel Rudolph said.
“European markets didn't fare so well, though, with particularly Europe's largest economy and stock market - the DAX 40 - extending Thursday's sharp sell-off amid concerns over high energy prices with Brent crude trading back around the $100 mark amid heightened tensions in the Gulf region."
3.10: Footsie ignores Wall Street
The FTSE 100 slipped 39 points in afternoon trading, shrugging off a buoyant open on Wall Street, as renewed military clashes near the Strait of Hormuz kept sentiment cautious in London.
US stocks pushed higher after the American economy added 115,000 jobs in April, well ahead of the 65,000 median forecast, with unemployment holding at 4.3%. The S&P 500 rose 0.7%, and the Nasdaq gained 1.2%.
Oil prices edged higher after fresh exchanges between US and Iranian forces near the Strait, though President Trump described the action as limited and said the ceasefire agreement remains intact.
1.55: Peace hopes fade
UK blue-chips pared some of their losses ahead of what looks set to be a positive open on Wall Street. But sentiment could turn on a penny in the States if the April jobs print is particularly gruesome.
And there's always the mercurial Donald Trump to contend with as the Iran stand-off looks no closer to resolution.
Prediction markets are placing long odds on a swift resolution to the conflict, with traders on Polymarket, the cryptocurrency-based forecasting platform, assigning just a 34% probability of a permanent peace deal by 31 May 2026, rising to 54% by 30 June.
The market, which has attracted nearly $88 million in trading volume, implies the conflict is likely to be a protracted affair despite a flurry of diplomatic activity in recent days.
Polymarket's year-end contract prices a 73% probability of an eventual deal by 31 December, suggesting the market's central case is a resolution in the second half of 2026 at the earliest.
For markets, airlines and energy traders, the data offers a blunt summary of where informed money currently sits: a deal is more likely than not this year, but a swift end to hostilities before summer remains a long shot.
12.30: BT boost
BT rose almost 3% to 227.5p after JP Morgan argued the stock is entering the next leg of a re-rating that has already seen it double from its 2024 lows, reiterating its 'overweight' rating on the shares.
Analyst Akhil Dattani at JP Morgan said the coming months should ease the key concerns that have kept many investors on the sidelines, centring on competition from alternative network providers, known as altnets, the credibility of management's cash flow targets, and a sizeable pension deficit.
On cash generation, JPM expects the financial year ending March 2027 to deliver 30% growth in equity free cash flow (EFCF), a measure of cash available to shareholders after debt costs and capital investment, marking the first meaningful inflexion after six years of broadly flat performance.
10.55: Gilts steady ... but elevated
Here's another stake on the current state of the gilt market, from AJ Bell's head of markets, Dan Coatsworth.
Yields are staying stubbornly high after a bruising night for Labour in the local elections, with bond markets now wrestling with two uncomfortable questions: what happens to fiscal policy if Starmer goes, and who replaces Chancellor Rachel Reeves, as the two are viewed as a unit?
The 30-year gilt yield, a better gauge of political sentiment than the standard 10-year benchmark, held at 5.628%, having touched 5.8% earlier this week. Three months ago, it was sitting at 5%. That's a significant move.
Coatsworth explains why markets are nervous. Reeves had worked hard to win bond investors over with a slow, steady approach to fiscal discipline - and it had been working, with gilt yields trending lower between October 2025 and February 2026. Now that hard-won confidence is at risk.
"Reeves had just got to the point where markets seemed comfortable with her strategy, and now that trust could disappear into thin air," Coatsworth said, warning that a new chancellor might not show the same patience.
Nobody wants a repeat of the Liz Truss episode, and Coatsworth is clear this isn't that ... yet. But with markets already pricing in two rate hikes this year and political uncertainty rising, the bond vigilantes are very much awake.
The Footsie, in the meantime, has retraced more of the morning's losses. It's now 35 points down at 10,241.59.
10am: Gilts steady ... for now
UK gilt markets are holding steady for now, but Saxo Markets analyst Neil Wilson is watching closely as Labour's local election results continue to come in - and the picture is not pretty for the governing party.
The 10-year gilt yield is sitting just below 4.9%, with the 30-year holding under 5.6%. Those are relatively calm numbers, but Wilson notes that the 30-year hit 28-year highs earlier this week and warns that bond markets are finely tuned to political risk.
"There's a chance the political scene goes a bit woo-woo, and bond markets are very attuned to this," Wilson said.
With Reform making sweeping gains and pressure mounting on Prime Minister Keir Starmer, the bond vigilantes are lurking in the background, and any perception of a weakening or destabilised government could push yields higher against an already difficult backdrop of sticky inflation and limited fiscal headroom.
Sterling is steady for now, with GBPUSD holding around 1.360, though Wilson notes the pound has struggled to break convincingly out of its recent $1.34–1.36 range despite some improvement in the broader macro picture - improvement that, he adds, has since taken "a bit of a turn south."
The FTSE 100, in the meantime, has retraced some of the morning's losses and is now 55 points down at 10,221.81.
9.10am: Under pressure
The FTSE 100 remains under pressure as the morning session progresses, down 72 points at 10,204, as investors weigh up two unsettling developments: fresh escalation in the Middle East and a difficult night for Labour in the UK local elections.
On the global side, the mood has shifted. Patrick Munnelly of Tickmill Group notes that Middle East tensions have "reintroduced the energy-supply shock markets had started to fade," with the MSCI All Country World Index slipping 0.3% and Asian markets reversing Thursday's record close with a 1.1% fall.
While Asian equities are still on course for a fifth consecutive weekly gain - their longest run since January - he says the setback does "challenge the clean 'Iran deal / AI rally / soft landing' narrative that had driven global indices to new highs."
Closer to home, the UK has its own complications. Local election results are still filtering through, and gilt markets are watching closely. Munnelly warns that if the results reinforce the perception of a weakening government, bonds may have to price in a less stable political backdrop on top of already difficult fundamentals: sticky inflation, high debt costs and limited fiscal room.
He puts it plainly: "The global story is oil and Hormuz; the UK story is whether political pressure further erodes confidence in the policy mix."
With Polymarket putting the odds of Starmer's exit by the end of June at around evens, Munnelly reckons that question is unlikely to go away quickly.
8.15am: Sorry start for the Footsie
The FTSE 100 fell sharply at the open, toppling 80 points to 10,196.14 in the first 15 minutes of Friday trading. Apart from concerns about the ceasefire between the US and Iran after both sides exchanged fire in the Straits of Hormuz, local government elections in the UK are also weighing on the markets as the results trickle in.
Intertek Group PLC (LSE:ITRK) leads the losers this morning, down 7.5%, after rejecting an improved 5,800p per share cash proposal to acquire the company from private equity firm EQT.
International Consolidated Airlines Group SA (LSE:IAG) is down 4.7% after it warned of the impact of the Middle East conflict on its annual fuel bill.
Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF, FRA:6E2) has shed 1.9% in early dealings, while St James's Place PLC (LSE:STJ) is also 1.9% lower.
Among the gainers, BT Group PLC (LSE:BT.A) is up 1.9%, while Airtel Africa PLC (LSE:AAF) and Antofagasta PLC (LSE:ANTO) have both added 1.3%.
7.55am: IAG warns conflict will dent profits
International Consolidated Airlines Group SA (LSE:IAG), the group behind British Airways, Iberia, Aer Lingus and Vueling, has delivered a strong set of first-quarter numbers, with operating profit jumping 77.3% to €351 million. But the Middle East conflict is casting a shadow over the rest of the year.
The problem is fuel. Spot prices roughly doubled in a single month earlier this year, and while IAG is 70% hedged and expects to claw back around 60% of the hit through pricing and cost measures, the remainder will weigh on full-year profits. The group now expects its annual fuel bill to hit around €9 billion.
Around 3% of IAG's network covered Gulf routes before the conflict. Those aircraft have been redeployed to Bangkok, Singapore, India and elsewhere, where demand remains strong - particularly in premium cabins and on transatlantic routes.
Aer Lingus had a tough quarter, deepening its operating loss to €103 million. Net debt fell sharply to €4.18 billion, and IAG remains on track to return €1 billion to shareholders by early 2027.
7.50am: House price blip
UK house prices barely moved in April, with Halifax reporting a 0.1% monthly dip to £299,313. Annual growth slowed to 0.4%, as global uncertainty and rising energy prices made some buyers more cautious.
Halifax's Amanda Bryden struck a calm tone, pointing to wage growth outpacing house price inflation as a reason for quiet confidence. Foxtons CEO Guy Gittins agreed, calling the dip "unlikely to cause concern" given the broader economic turbulence.
Not everyone is so relaxed. House Buyer Bureau's Chris Hodgkinson warned that sellers pricing on hope rather than reality are finding their homes sitting unsold, with bigger price cuts to follow.
Regionally, Northern Ireland topped the table with 7.6% annual growth, while London and the South East continued to slide. First-time buyers saw the average price they paid ease to £238,908 — the lowest point so far this year.
7.40am: Rough night for Labour
While we wait for the markets to open, here's a look at the first results from yesterday's local elections.
It was a rough night for Labour. The party haemorrhaged councillors across England as Reform UK stormed through its traditional northern heartlands, picking up seats in places that once seemed untouchable for any party but Labour.
Reform's biggest moment came early, when it took control of Newcastle-under-Lyme - its first ever council. In Hartlepool, it went even further, winning all 12 available seats and likely pushing Labour into opposition. Nigel Farage was predictably delighted, calling it a historic shift in British politics.
Political scientist Sir John Curtice poured a little cold water on the triumphalism, telling the BBC that Reform probably fell short of 30% of the vote - but pointed out that four other parties were all bunched together in the mid-to-high teens behind them, which tells its own story about how fragmented British politics has become.
Back in the Labour camp, the mood was grim. Hartlepool's MP called on Starmer to announce his departure, and John McDonnell said a leadership change needs to be on the table.
Not everyone had a bad night. The Liberal Democrats celebrated wins in Stockport and Portsmouth, while the Greens made gains in Oxford. Turnout nudged up to 31.5%, slightly ahead of 2024. The full picture is still emerging.
7.20am: Footsie likely to extend losses
The FTSE 100 looks set for a sharp fall at the open as the price of oil responds to an exchange of fire between the US and Iran, despite a ceasefire between the two sides.
London's blue-chip index is expected to open around 80 points lower after toppling 161 points to 10,276 in Thursday's session.
"As we go to press this morning, markets have slipped back thanks to questions about whether the US-Iran ceasefire is holding," Deutsche Bank's Jim Reid wrote in his morning report. "Indeed, there’s been a clear escalation in the last few hours, with the US striking targets in Iran after they fired on three US warships in the Strait of Hormuz. And in turn, Trump posted that 'we’ll knock them out a lot harder, and a lot more violently, in the future, if they don’t get their Deal signed, FAST!'"
Brent crude oil has jumped 1.58% to $101.64 a barrel, after trading below $100 for most of Thursday.
"However, markets still aren’t pricing in the worst-case scenario, as Trump told ABC News that 'the ceasefire is going. It’s in effect', referring to the US strikes as a 'love tap'," Reid added.
In the US, stocks eased back from record levels on Thursday as investors took a breather following the previous session’s strong rally, with gains in energy and a continued pullback in high-flying tech names leaving the major indexes slightly lower by the close.
The Dow Jones Industrial Average fell 0.6%, the S&P 500 slipped 0.4%, while the Nasdaq edged down 0.1%.
Asian markets are mostly weaker this morning, with Tokyo's Nikkei down 0.3%, the Hang Seng losing 1.1%, and the Shanghai Composite slipping 0.1%. Seoul's Kospi is little changed, but Sydney's ASX 200 closed 1.5% in the red.