- FTSE 100 up 25 points at 10,491
- Oilers down and miners up on Iran deal optimism
- Kingfisher sales fall less than expected
5.30pm: Stocks gain
The FTSE 100 finished Tuesday’s session up 25 points at 10,491 as across the Atlantic US stocks traded at fresh all-time highs.
“Falling yields and retreating oil prices on hopes of a US-Iran ceasefire extension and possible agreement helped US stock indices kick off the week on a strong footing as traders returned from a long weekend,” IG chief technical analyst Axel Rudolph said.
“The Nasdaq 100 and S&P 500 traded in record highs with the latter on track for its eight consecutive week of gains with tech stocks leading the way."
4.12pm: Ferrari and Ive's EV design disappoints
Shares in Ferrari are down 4.6% in New York and over 7% in Milan after the Italina stallion revealed its long-awaited first electric vehicle.
The electric Luce, designed by former Apple guru Jony Ive, the first car from the Maranello company to have five seats, and only the second to have four doors.
It is available for $640,000 (£545,000).
In the launch statement, Ferrari chief executive Benedetto Vigna said: "We are convinced that a company demonstrates its leadership when it has the courage to dare and to take on the challenge of new technologies. Ferrari Luce was born precisely from this challenge, offering our unprecedented vision of electrification."
But analysts are not so sure, with analyst Pierre-Olivier Essig at AIR Capital calling the Luce a "mix between a Honda Accord EV and Tesla 3" and adding that "we are lost in translation with Ferrari’s new strategy."
Ferrari last year set out a new scaled-back aim to have 40% of its models on internal combustion engines by 2030, with 40% hybrids and 20% full EVs, down from a 20% petrol share plan it set out four years ago.
3.41pm: Micron joins the $1trn club after UBS hike
Micron Technology, up 18% so far today, has become the latest $1 trillion market cap company.
The computer memory and data storage hardware maker joins Nvidia ($5.25 trillion), Alphabet ($4.7 trillion), Apple ($4.6 trillion), Microsoft ($3.1 trillion), Amazon ($2.9 trillion), Broadcom ($2.05 trillion), Tesla ($1.6 trillion) and Meta ($1.55 trillion).
Micron was boosted today by UBS hiking its target price for the stock over stronger AI demand and long-term supply deals.
The Swiss bank's new 12-month target of $1,625 a share, up sharply from $535 before, and Friday close of $751 puts a potential valuation of close to $1.8 trillion.
Analyst Timothy Arcuri says long-term supply agreements across the memory chip industry are reshaping the earnings outlook for Micron, prompting the bank to raise forecasts for 2027-2029 and predict annual earnings per share will remain comfortably above $100 throughout the period.
He forecasts more than $400 billion in free cash flow over those three years and argues "the market will start to put a more 'normal' multiple on the stock and MU will continue to re-rate higher as more details emerge about the structural changes AI has driven to the entire memory complex".
2.48pm: Wall Street opens higher
New York stocks have opened firmly higher, led by tech companies on the Nasdaq Composite, with the index up 0.95% in initial trading.
The S&P 500 climbed 0.7% and the Dow Jones 0.3%.
Top risers on the Nasdaq 100 were chip and AI-linked stocks, with Micron Technology top of the early leaderboard, up 12%, followed by AppLovin, Marvell Technology, Western Digital, Analog Devices, AMD, Broadcom and Texas Instruments.
On the Dow, Honeywell, Goldman Sachs and Boeing were top risers, while IBM, Cisco, UnitedHealth and Chevron were a drag, with almost half of the 30-name index in the red.
2.34pm: BP analysis
BP is the worst performer on the FTSE 100, down 9% initially but easing to 4.8% now, after chairman Albert Manifold was removed less than eight months into the role.
With no detail as to what the breaches of "governance standards, oversight and conduct" were, or when they occurred, "it leaves investors wondering how they weren’t unearthed during the hiring process," says market analyst Kathleen Brooks at XTB.
The news raises questions for BP shareholders, she adds, firstly stemming from Manifold being brought in to spearhead the transition back to oil and gas, after a foray into renewables that did not do much for the share price.
"Will his removal threaten his transition or delay this process? He was considered a hands-on and controversial chair, and managed to survive a shareholder rebellion last month.
"He reportedly clashed with new CEO Meg O’Neill, so this could be a win for her, but it comes at a high price and a lurch lower in for the shares."
Added to this, Manifold’s ousting is the second sacking over conduct reasons in three years, Brooks notes, with ex-boss Bernard Looney replaced in 2023 due to failings in his personal conduct.
"The fact that Manifold has left so soon raises genuine concerns about HR policies at BP, and the corporate culture. It also suggests a lack of stability at the firm, which is bad news for shareholders."
But Brooks says O’Neill "now has a chance to use Manifold’s ousting as a way to accelerate her own agenda. She has a track record in the oil and gas field, and there is a lot resting on her strategic shift at the firm".
2.02pm: BP sacks chair
BP shares are down almost 5% after it abruptly removed its chair Albert Manifold after the board said it uncovered “governance oversight and conduct issues it deems unacceptable”.
The oil major said the decision to remove Manifold as chair and director was unanimous and effective immediately, less than a year after he took the role.
No further detail was provided, beyond references to “important governance standards, oversight and conduct”.
Senior independent director Amanda Blanc said the board had been “surprised and disappointed” by what it had learned. Investors will probably focus as much on the word “surprised” as “disappointed”.
Ian Tyler has been appointed interim chair while BP launches yet another succession process at the top of the company.
The timing is awkward for a group already struggling to project stability after cycling through three chief executives in under three years.
1.07pm: What do markets make of the reheated Brexit debate?
A view on Westminster politics from UBS, where strategists note that while Keir Starmer remains in post as prime minister, "a more defined pathway toward a leadership contest is taking shape, even if no one has made a decisive move yet".
Andy Burnham is "the key constraint", as none of the other main frontrunners already in Parliament look willing to move without him, which relies on the Greater Manchester mayor winning the upcoming Makerfield byelection expected on 18 June.
UBS economist Maelle Quillevere said “the campaign already feels under way”, pointing to comments from health secretary Wes Streeting describing Brexit as a “catastrophic mistake” and arguing Britain should eventually rejoin the EU.
Markets have so far remained relatively calm, however. UBS said the renewed Brexit debate "does little to change the underlying outlook for the UK economy or assets".
"Near-term volatility is more likely to be driven by other factors, most notably the domestic fiscal trajectory and external developments such as tensions in the Middle East.
"So, our message remains unchanged: Portfolios should remain well diversified and positioned to lock in yields in quality bonds."
The broker added that while closer UK-EU alignment now looked “increasingly inevitable”, full re-entry into the bloc remained “a more distant and uncertain prospect”.
12.29pm: FTSE retreats from earlier high
After hitting a five-week high of 10,549 earlier, the Footsie is still holding onto solid gains as the clock moves past noon.
European markets are mixed, with only the IBEX in Madrid joining London in green. Others are as red as the temperature gauges around Europe, with Germany’s DAX down 0.5% and France’s CAC 40 dropping 0.8% amid broader caution over geopolitical developments.
US futures are still well in positive territory, led by the tech-powered Nasdaq, up 1% compared to gains of 0.6-0.7% for the Dow and S&P 500.
In the Gulf, Iran’s Islamic Revolutionary Guard says it "downed" a drone that entered its airspace, with tensions not seeming to have lowered during peace negotiations.
Another military spokesperson warned any new aggression by the US and its allies would be met with a "far more severe" response extending beyond the region, and new Supreme Leader Mojtaba Khamenei said Gulf states will no longer be "a shield" for US military bases in the region.
11.32am: Invest in a padel and pickleball empire?
Jonathan Rowland, the financier behind Redwood Bank and son of the late “Spotty” Rowland, is taking another swing at financial engineering – this time with padel and pickleball.
His Aquis-listed VVV Sports wants to raise £5 million to fund a US expansion, buy more racket-sports assets and pursue a Nasdaq listing. The group has also acquired TOPSERIES Pickleball, which it describes as a "leading pickleball circuit operating outside the United States".
Among the grander ambitions: a proposed £120 million Abu Dhabi padel complex, a planned US padel "centre of excellence" in New York, a Miami operating base, and a six-part Amazon Prime docuseries. Naturally, there is also a sports betting platform in the mix.
10.44am: About a BOY
The cash proposal for Bodycote Group (ticker: BOY) from US private equity firm Apollo last Friday does not fully recognise the growth opportunities in the business, according to analysts at Deutsche Bank and Peel Hunt.
The approach, which values Bodycote at approximately £1.52 billion, followed what the company said had been a number of previous proposals.
Deutsche Bank's Thomas Elgar says: "At first glance and given other competitive bid processes in the sector, we do not view the proposal as a ‘knockout’ offer. We have long argued the quality within Bodycote was underappreciated, particularly its high-margin A&D business, which has reached critical mass and the adjacent high-growth opportunity set in industrial gas turbines".
Peel Hunt's Harry Phiulisp adds that it is "interesting to note" that the company has engaged with Apollo.
"We do not know the context or extent of the conversations and what level of access, if any, they have been given. Our sense is that this is the opening of the debate around BOY."
He also expects other private equity players to be interested in BOY, with buyout firms having been "omnipresent at lower levels in US heat treatment in recent years but an opportunity to acquire the global market leader in a consolidating growth market is, in our view, a compelling opportunity".
10.04am: Melrose impact too early to tell
Shares in Melrose were down almost 7% in early trades, but are now sitting at around a 5% deficit.
"When considering the risks facing GKN Aerospace owner Melrose, few investors would have had a potential explosion at a Californian manufacturing facility on their bingo card," says AJ Bell investment director Russ Mould.
"The incident, which developed over the long weekend, involving a storage tank at the facility may not have caused ‘injuries, leaks or contamination’ but has resulted in significant evacuation orders and wider disruption to the surrounding community.
"Keeping everyone safe is obviously more important than any future financial impact but the crisis is particularly unhelpful at a time when Melrose is already under pressure thanks to the impact of the Iran war on the aviation sector."
Harry Philips at Peel Hunt says since the incident erupted on Friday, technical specialists, the emergency services, and the relevant authorities have worked closely to resolve the situation, with a focus on ensuring the safety of the local community, employees, and everyone else involved.
"As a result of the positive progress that has been made over the last few days and the reduced risk, on 25 May, the OCFA announced that the mandatory evacuation area had been significantly reduced with immediate effect," he adds, with the local authorities confirming that no injuries, leaks, or contamination have occurred.
"It is too early to assess the possible financial impact and we will have to wait for further updates from the company. The core investment case is unchanged."
9.12am: Buying the dips
The FTSE is standing 69 points higher at just above 10,535 after a little over an hour's trading at the start of the holiday-shortened week.
Moves in oil and metals prices, which have sent some of the index's heavyweight sectors up and down encapsulate a "straightforward" message for markets, says analyst Patrick Munnelly at Tickmill: "the peace trade is more fragile than Monday’s price action suggested".
He said the latest round of US strikes "complicates hopes for an interim deal to extend the ceasefire and reopen the Strait of Hormuz, even though Trump said talks were 'proceeding nicely' and Pakistan’s military chief Asim Munir reportedly told China that an agreement was close.
"Investors are still cautiously optimistic, but the risk premium has not disappeared. As long as military action and negotiations are running in parallel, energy markets will remain vulnerable to abrupt reversals."
Market analyst Daniela Hathorn at Capital.com agrees that the "optimism looks fragile", with markets shifting "back into a more cautious tone" after the fresh US strikes in southern Iran.
With negotiations in Qatar reportedly continuing, "that leaves markets in an awkward middle ground", she says.
"Investors are no longer pricing an imminent escalation into a full regional war, but neither are they pricing a clean resolution. Instead, the market seems to be settling on a 'messy stalemate' scenario where the ceasefire broadly holds, but sporadic attacks, military incidents and diplomatic setbacks continue to disrupt confidence and energy flows."
Strong earnings, particularly in large-cap tech, dominate the stock market narrative, with investors still appearing "willing to buy dips on the assumption that the conflict ultimately de-escalates".
8.34am: Autotrader downgraded
Autotrader is third on the fallers list this morning, as broker Panmure Liberum downgraded its rating on the car-selling platform to 'hold' from 'buy'.
"The aftermath of the disastrous deal builder rollout has been worse than our expectations," says analyst Sean Kealy, trimming EPS by 3% as benefits of a share buyback are offset by higher finance costs.
"Autotrader is still a good business, capable of delivering mid-single-digit top-line growth in the medium term."
He says the "wheels haven’t come off entirely" but management's guidance "presumes recovery in paying retailer customers, and the end-market remains weak".
8.15am: Kingfisher helps FTSE opens higher
The FTSE 100 has sprinted 79 points higher to almost 10,546 in initial Tuesday trading, as UK investors catch up with gains elsewhere on the back of seeming progress in US-Iran negotiations.
Kingfisher has flown to the top of the early risers, up 6% on the back of its relatively robust Q1 update.
Miners and airline-related shares are also among those flourishing, with Endeavour Mining up 5.1%, British Airways owner IAG rising 3%, and Glencore, Rio Tinto and Rolls-Royce all just below that.
Melrose is down the bottom, falling 4.5% after the threat of an explosion at a plant in Orange County, California led to thousands of local residents being evacuated from the area.
Other fallers include BP and Shell after the sharp fall in crude prices compared to last week.
7.50am: Wet weather for Kingfisher, explosion risks for Melrose
Kingfisher saw like-for-like sales shrink 0.7% in the first quarter but the B&Q and Screwfix owner said it remains on track to meet full-year guidance.
The DIY retailer reported total sales up 1.4% to £3.3 billion for the three months to 30 April.
Chief executive Thierry Garnier called it a "resilient start... gaining market share against a soft market backdrop... even as a late start to spring impacted footfall and seasonal demand".
Elsewhere, Melrose Industries has sought to reassure investors after a chemical incident at a GKN Aerospace facility in California triggered evacuations of 50,000 residents and warnings from emergency crews that a storage tank risked exploding.
Authorities said the wider crisis was not yet over, however, warning there remained a risk of a smaller explosion or chemical leak. Evacuation orders have been reduced but still cover around 16,000 residents.
The aerospace and engineering group said a “thermal issue” involving a storage tank containing methyl methacrylate, a highly flammable chemical used in aerospace acrylics, was identified at its Garden Grove site in Orange County on 21 May.
However, local officials and media reports suggested the situation was significantly more serious than the company’s brief update implied.
7.29am: Market catch-up
Asian stocks are mixed this morning with small losses slightly outnumbering small gains, while oil prices are well down on recent levels.
Brent crude futures, which fell from $107 on Thursday to as low as $96 a barrel on Monday, are up 2% at $98.22 this morning.
Here's Jim Reid, macro strategist at Deutsche Bank, with a catch-up.
"Since the weekend, the real hope is that the days may also be numbered for the war in Iran as well, with momentum building since the start of the weekend that a deal could be in the works."
He notes that Brent saw its lowest levels of the month "before news overnight that US and Israeli jets conducted fresh strikes in Southern Iran, hitting missile launch sites and mine-laying boats", with these actions described as "defensive" and not an end to the ceasefire with Iran.
"Net net, optimism is still elevated that an agreement can be made to end the war.
"We have been here before, of course, but it has felt for some time that the move towards peace has been three steps forward and one or two back.
"It is now 48 days since the main kinetic encounters, and my view for a while has been that such a prolonged truce and ceasefire would not have held if the US genuinely wanted to continue strikes, unless there was absolutely no alternative.
"Last night's targeted action is clearly a warning shot that the ceasefire is fragile though, so we will have to see what the next few days of negotiations bring."
Reid flags that 10yr European bonds were around 9-to-12bps lower across the curve yesterday and this morning 10yr USTs have reopened five points lower after the long weekend.
The Euro Stoxx yesterday climbed 1.1% to close within a whisker of pre-Iran War levels, "and if you're looking for a highlight then the FTSE-MIB (+2.24%) finally cleared its all-time high last seen back in the year 2000!! So a momentous day for Italy!"
Market open:
The FTSE 100 on Tuesday may be playing catch-up after the long weekend, as large gains were seen in Europe at the start of the week but a final US-Iran ceasefire deal continues to remain out of reach.
European investors reacted with optimism yesterday after Donald Trump said a "memorandum of understanding" in talks to end the US and Israel's war on Iran "has been largely negotiated", sending Germany's DAX and other indices up around 1.8-2%.
Today, FTSE futures are up around 23 points, but investors on spread-better IG are predicting around a 60-point fall.
For Wall Street, which was also closed for a public holiday on Monday, futures are currently pointing to mid-sized rises, with the Dow Jones and S&P 500 called 0.7% higher, and the Nasdaq 100 predicted to jump 0.9%.
The US launched strikes on southern Iran overnight, targeting missile launch sites and boats allegedly laying mines, in what Washington described as “defensive” action during the seven-week ceasefire.
This came despite a senior delegation of Iranian negotiators, including the foreign minister, parliament speaker and central bank chief, travelling to Qatar for fresh talks with the US over frozen financial assets and a possible wider deal.