- FTSE 100 down 70 points to 10,338
- Drax buys Bluefield Solar at 31% premium to last close
- easyJet jumps as Castlelake considers possible offer
5.15pm: Shares pull back
The FTSE 100 finished Monday’s session down 70 points at 10,338 as peace talks between the US and Iran fell apart. Oil prices surged more than 6%.
“Hopes of further progress in US-Iran talks have been dashed as the latter has walked away from the table. This has duly resulted in a spike for oil prices, since the combination of this and the weekend’s exchange of fire dramatically raises the chances of a fresh round of conflict,” IG chief market analyst Chris Beauchamp said in a statement.
“Markets know that oil stockpiles are being rapidly run down, and the rosy assumptions around the renewal of supplies involved the straits being open by June. No such opening is in sight, and each day brings the crunch point closer.”
4.04pm: M&A boosts but Iran optimism tested
Summing up the day, potential takeover interest in easyJet from the US and a deal from Drax to buy solar investment trust Bluefield helped provide a boost some depressed corners of the UK market.
UK manufacturing data was better than expected, but house prices fell month-on-monthly for the first time this year.
Global stocks were mixed, with President Trump insisting markets and critics "relax" over the lack of an Iran ceasefire deal yet.
Then Iran said it would walk away and threatened to widen the scope of its retaliation unless Israel stop attacking its allies in Lebanon and Gaza.
Oil prices spiked, with the optimism from last week that had sent energy prices to around six-week lows, seemed to evaporate.
The FTSE is down 1%, the DAX is down 0.6% but things in New York are mixed, with the Dow up 0.2% and the S&P and Nasdaq both roughly flat.
3.33pm: Defence and gold miners sink lower
The main protagonists of the FTSE's fall have continued to sink lower as the day has gone on.
Defence and aerospace companies have sunk deeper, with Rolls-Royce down 5.2%, while BAE Systems and Babcock are down 4.7-4.8%.
Gold miner Endeavour is down 4.8% too, with Fresnillo sinking 2.7%, as the price of gold is down almost 2% and silver is 1.2% lower.
Housebuilders Persimmon, Barratt and Persimmon down 4.6%, 3.4% and 3%, following the house price news earlier, with rising oil prices also not good news for inflation and rate expectations.
2.40pm: Oil prices spike as Iran says it is pulling out of US talks
Oil prices have shot higher and the FTSE has tumbled lower in the past half-hour.
Iran's Tasnim news agency has reported that Iran’s negotiating team is pulling out of message exchanges with the US through mediators Pakistan due to Israel’s offensive in Lebanon.
Iran and its "resistance front" will look to completely block the straight of Hormuz and "activate" other fronts, including the Bab el-Mandem strait off the coast of Yemen, where Iran's allies the Houthis have previously targeted shipping in the Red Sea.
In other words, Iran says there will be no peace talks with the US until Israel stops attacks on Lebanon and Gaza.
Tehran's foreign ministry has also said that a full ceasefire in Lebanon is an “essential condition” for a deal with the US.
Brent crude jumped to $96.75 a barrel, up 6.2% on the day.
European markets are all down, with the DAX off 0.4%, France's CAC 0.6%, while US markets have opened mixed.
The Dow Jones slipped 0.3% in opening trades while the S&P 500 started in the red but is now up just over one point, with the Nasdaq gaining 0.1%.
Iran Warns US, Israel of Consequences for Ceasefire Violations
Iran’s FM declared that any ceasefire between Iran and the US must be total and unambiguous, covering all fronts, including Lebanon, warning that the US and Israel are responsible for the consequences of any breach. https://t.co/KDR3EZ2GD0
— Tasnim News Agency (@Tasnimnews_EN) June 1, 2026
2.01pm: Asda troubles boost larger rivals
Tesco and Sainsbury shares are up 1% and 1.5% today, having received a boost from Asda's latest trading update.
Analysts argue that the struggling Leeds-headquartered supermarket's continued market share losses underline the resilience of its larger listed rivals.
Asda reported first-quarter like-for-like sales down 1.3%, an improvement on the 4.2% decline recorded in the previous quarter but still well short of the stabilisation many investors had hoped for.
Channelling Obi-Wan Kenobi, JPMorgan described the figures as "not the Asda turnaround story you were looking for", noting that more than a year after the grocer launched a major price reset, underlying sales remained in decline.
1.14pm: Would an easyJet takeover be easy?
Castlelake's move on easyJet has put the spotlight on an airline whose shares have lagged rivals despite a valuable fleet, airport slots and a large Airbus orderbook.
We take a closer look at why the US investment firm is interested, the regulatory and shareholder hurdles facing any bid, and whether the approach could unlock wider interest in the carrier.
Also, easyJet founder Sir Stelios Haji-Ioannou retains approximately 15% of the share capital, and receives annual royalties for the easyJet brand rights.
Would this put off a suitor? His track record of public disagreement with the company's management suggests he would not be a passive participant in any ownership change.
12.57pm: UK orders £36m of drone-destroying missiles
The Ministry of Defence has announced a £36 million order for lightweight 'multirole' missiles from a Belfast plant owned by French defence contractor Thales.
Recent months have seen the missiles used extensively to shoot down drones in the Middle East.
"They have played a key role in defeating drone attacks in the Middle East, with more than 100 drones shot down using the missiles, including by RAF Regiment gunners using the Rapid Sentry air defence kit," the Ministry of Defence said.
The Thales contract supports around 700 jobs at the Northern Ireland operation, with deliveries are due to begin in the coming months and continue through 2026.
Defence secretary John Healey said: "Our UK defence industry is the backbone of our Armed Forces. This is our new partnership with industry in action."
12.25pm: Wise leads European fallers
At the start of the afternoon, the FTSE and Spain's IBEX are both in the red, while German, French and Italian benchmarks are in green.
The pan-European Stoxx 600 is down 0.2%.
Biggest faller is Wise, down 13.3% after the money transfer group confirmed that it is answering queries from the Belgian prosecutor's office.
The enquiries are "still incomplete and no specific findings have been shared with us to date. As such, it would be speculative for us to comment on any allegations," the company said.
The fintech stressed that responding to requests from law enforcement agencies and filing suspicious activity reports were normal parts of operating a financial institution and were not, by themselves, evidence of wrongdoing or regulatory breaches.
Elsewhere, US futures are still green, though the shape of the picture has changed, with the Dow Jones now seen taking the lead, with futures up 0.5%, compared to a 0.2% gain for the Nasdaq, while S&P 500 futures are up 0.3%.
Further around the globe in Japan, SoftBank Group has overtaken Toyota Motor as the country's most valuable company.
Masayoshi Son's technology investment group climbed 14% in Tokyo trading to 48.8 trillion yen, this pushed its market cap above Toyota’s for the first time in more than two decades, which Bloomberg says marks "a milestone for the global artificial intelligence boom and a dramatic reshuffling of the country’s corporate hierarchy".
11.41am: Next FTSE reshuffle
The outcome of FTSE Russell's next index reshuffle will be revealed on Wednesday, with property portal Rightmove and housebuilder Berkeley expected to lose their places in the FTSE 100.
Based on market values at Friday's close, the pair are set to be replaced by IT services group Computacenter and asset manager Aberdeen.
However, the final line-up remains finely balanced ahead of tomorrow's closing prices, which will determine the rankings used for the reshuffle.
Computacenter and Aberdeen are currently 84th and 87th largest qualifying companies, while Investec is touch-and-go for promotion, standing at 93rd.
Index managers FTSE Russell suggested last week that Investec would be going up, but it would only gain automatic promotion to the blue-chip index if it improves from its current 93rd place to 90th or above, or if Mondi, currently 108th place at £3.3 billion, sees its shares tumble in the next two days to put it into 110th place or lower.
Berkeley and Rightmove, at £3.2 billion and £3.1 billion, are now in 112th and 117th place, respectively, and are almost certain for relegation.
Any changes announced on 3 June will take effect from 22 June, prompting index-tracking funds to adjust their holdings accordingly.
FTSE Russell last week said new promotions from the small caps league up to the FTSE 250 could include Bloomsbury Publishing, Cordiant Digital Infrastructure, Globaldata, Hansa Investment Company, Rosebank Industries and Seraphim Space Investment Trust.
11.04am: Oil tops $94 again
The Brent price has crossed above $94 now, up 3.4% today, having fallen from $114 a month ago to below $92 on Friday.
In the background, prediction market traders give only a 26% probability that shipping traffic through the Strait of Hormuz will return to normal by the end of June, down from the 50% chance the market was showing in May as the Iran conflict drags on.
This Polymarket contract has attracted nearly $12 million in trading volume.
Before the US and Israel launched their attacks on Iran in late February, more than 100 commercial ships a day or around 3,000 vessels a month typically passed through the Strait.
Transits have since fallen to less than 10% of pre-conflict traffic, with the waterway commercially unnavigable for most shipping.
The New York Times has reported that US forces have helped around 70 commercial vessels through the Strait in recent weeks.
Citing US officials, the report suggested that most of the vessels had turned off their transponders to avoid detection, meaning that analysts also have been unable to verify their passage.
Shipping analysts said the US-guided crossings appear to follow routes that are closer to Oman.
10.50am: Manufacturing sector data puts BoE hike "off the table"
Some commentary on the earlier UK manufacturing PMI, which has remained resilient at 53.9 in May, up from 53.7 in April, to its second-highest since October 2024.
Rob Wood at Pantheon Macroecomics adds that the fall in oil prices in the past two weeks and expectations of fewer rate hikes from the Bank of England boosted sentiment in the manufacturing sector towards the end of May, shown by the upward revision to the flash release.
"A chunk of that strength in output will probably unwind in coming months," he says, as the report says the strength in the PMI is "heavily reliant" on front-running by firms trying to get ahead of price hikes and supply chain constraints.
"Still, an improvement in the forward-looking balances suggests that there is some positive underlying momentum too," Wood adds, with the future output balance rising and new orders also continuing to rise at a healthy pace.
Thomas Pugh, chief economist at RSM UK, says a BoE rate hike at the next meeting later this month is now probvably "off the table".
He says the resilience of the manufacturing sector "is encouraging", especially when compared to the recent weakness in the services PMI and the drop in house prices from Nationwide this morning.
"However, the surge in input and output prices highlights that there is a substantial amount of cost inflation to come down the pipeline, at the same time as the economy is likely to weaken from its Q1 strength.
"For the Bank of England, apparent progress towards a peace deal in Iran and the drop in oil prices over the last week will be more important than some resilience in the manufacturing PMI.
"That means a rate hike at the next meeting later this month is off the table and it’s looking more likely that the Bank will keep interest rates on hold all year."
10.06am: Solar trusts get read-across boost
Some analyst thoughts on the morning's stories.
Drax's Bluefield deal has sparked hope of rerating across listed renewable energy infrastructure stocks, prompting investors to look at whether a sector that has endured persistent double-digit discounts to net asset value since interest rates began rising in 2022 could see more M&A.
In terms of read across to the wider sector, Will Crighton at Cavendish says the Drax offer is "a helpful validation" for other UK solar investors backed by renewables subsidies.
He says he believes it "should be supportive" to NextEnergy Solar and Foresight Solar, which ended last week as 50% and 42% discounts to NAV, respectively.
"Similarly to BSIF, the portfolios of both are predominantly ROC solar assets in the UK. Where BSIF differs, is that it also has a significant pipeline including 1.2GW of solar and BESS projects consented and ready-to-build."
Elsewhere, Applied Nutrition put out a "strong trading update", says John Stevenson at Peel Hunt, seeing "good momentum across all territories", .
"While there will have been an initial hit to revenue through the Middle East, this has now normalised, with the group having re-routed distribution."
An acquisition in the US, means Stevenson expects to upgrade revenue for the 2027 financial year from £155 million to £190 million, with PBT from £43.5 million to £49 million.
His colleague Charles Hall says ME International had "a difficult April", with photobooth revenue down 17% compared to a 6% in the first half, with Laundry growing 3% versus +17% in H1.
"Sales trends improved in May, albeit still below expectations, reflecting lower passport demand and the impact of a higher cost of living."
He has cut his full-year PBT forecast by 12%.
"Although trends have improved recently, we assume that weaker underlying performance continues in the short term."
9.46am:
UK manufacturing activity improved last month, according to the S&P Global manufacturing PMI survey.
The manufacturing purchasing managers' index rose to 53.9 in May from 53.7 in April, above the mid-month 'flash' reading of 53.7.
Surveys were collected on 12-26 May.
“May saw the UK manufacturing upturn gather pace, as growth of production and business optimism both rose to three-month highs," says S&P director Rob Dobson.
"The sustainability of the upturn remains in doubt, however. The recent upturn in new order intakes that is driving the expansion in output is heavily reliant on both manufacturers and their clients front-loading purchases to mitigate expected war-related price increases and supply chain disruption.
"This bounce will fade once customers have built up sufficient safety stocks.
"These price and supply factors are also having a direct impact on manufacturers, with cost inflation rising to a near four-year high and pressure on supply chains leading to material shortages and longer lead times.
"This will continue to constrain manufacturers and put growth at risk for as long as geopolitical uncertainty, war in the Middle East and risks to key transport routes such as the Strait of Hormuz continue to pose a threat."
9.35am: Nvidia's new business
Despite dominating the chip industry, Nvidia appears unwilling to stop there.
This week, at its GTC Taipei event, the company unveiled RTX Spark, a superchip combining its latest Blackwell graphics processor with a 20-core ARM-based central processor and includes up to 128GB of shared memory to handle demanding artificial intelligence workloads, all packaged into a thin Windows laptop.
As well as going direct into the consumer market, Nvidia is simultaneously opening a second, arguably more consequential front, we write here, by entering standalone processor sales, which marks a significant strategic shift for a company that has traditionally positioned its CPUs as companion chips to its GPUs.
9.09am: FTSE indices down but Halma and Applied Nutrition rise
After a little over an hour's trading, the FTSE 100 is down 15 points at 10,394.
Precious metals miners Endeavour and Fresnillo are down just under 3% as gold prices fall 1%.
Defence groups Babcock and BAE Systems are next, both down 2.3% as investors ponder a potential ceasefire in the Gulf.
Top of the blue-chip leaderboard are Ladbrokes owner Entain and safety products maker Halma.
Halma gained thanks to Goldman Sachs lifting its share price target and reiterating its ‘buy’ rating on the shares.
The FTSE 250 is also down 0.1%, but there are bigger moves among the mid-caps, with Bluefield Solar Income up 15.8% after agreeing to an offer from Drax.
There is a 10.3% gain for easyJet due to the apparent interest from Castlelake.
Applied Nutrition is up 10.4% after a short but action-packed update, raising its annual revenue outlook, announcing a $16 million acquisition in the US and a new licensing agreement with US food giant Mondelēz.
Shares in Me Group are down 22% after the photo booths and laundry machines company warned on profits due to a slowdown in French consumer spending.
8.44am: Gulf attacks, Trump says 'relax'
Latest reports from the Middle East reveal that Kuwait's air defences have been intercepting missile and drone attacks, with Iran releasing video footage of ballistic missile launches.
US central command said that it struck targets in Iran over the weekend, describing the moves as "self-defence" as it targeted "radar and command and control sites for drones".
US President Donald Trump posted on social media this morning that "Iran really wants to make a deal, and it will be a good one for the USA and those that are with us".
He fired back at critics, saying they make it "much tougher for me to properly do my job and negotiate, when political hacks keep negatively 'chirping,' at levels never seen before, over and over again, that I should move faster, or move slower, or go to war, or not go to war, or whatever.
"Just sit back and relax, it will all work out well in the end - It always does!"
Oil traders are not relaxing, with Brent crude oil up 3% to just under $94 a barrel now.
8.15am: FTSE opens lower as defence and gold miners fall
The FTSE 100 has opened in the red, as predicted, with a fall of 27 points to 10,382.67 in initial trades.
Precious metals, defence and aerospace stocks are leading the declines, with Fresnillo down 2.5%, Babcock and Rolls-Royce falling either side of 2%, followed by Endeavour Mining and BAE Systems.
Other fallers include Lloyds Banking, Compass, RELX and Rentokil.
8am: UK house prices fell in May
UK house prices fell 0.6% month-to-month in May, according to Nationwide, down from a 0.4% gain in April.
On an annual basis, house price inflation slowed to 1.7% in May from 3.0% in April.
Both measures were worse than the average economist forecast, which was a 0.2% monthly drop and a 2.3% annual rise.
It was the first monthly decline so far this year, according to Robert Gardner, Nationwide's chief economist.
“Given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates, some loss of momentum was to be expected," he says.
"Indeed, consumer confidence has weakened noticeably since the start of the conflict, with GfK’s headline index falling to its lowest level since late‑2023 in April, with only a marginal increase in May.
“Measures of housing market sentiment have also deteriorated. The Royal Institution of Chartered Surveyors reported a sharp fall in new buyer enquiries in March, taking the index to its weakest reading since 2023 and remained deep in negative territory in April."
Looking forward, he says that market interest rates have risen in recent months but the impact on affordability "has so far been modest", with underlying rates well below the highs reached in 2023.
"This provides some confidence that, if the latest shock passes relatively quickly, and energy prices normalise in the quarters ahead, any near-term softening in the housing market will also prove short lived."
7.52am: Drax buys Bluefield Solar
Biomass burner Drax has agreed to acquire Bluefield Solar Income Fund in a cash deal valuing the renewable infrastructure investor at approximately £548 million.
Directors of the Bluefield investment trust have unanimously backed the deal.
Under the terms of the offer, Bluefield shareholders will receive 92.574p in cash for each share and will also retain a second interim dividend of 2.25p per share due to be paid this month, giving a total valuation of around £561 million.
After the Bluefield board put the company up for sale last November, chair Michael Gibbons said directors are "pleased with the conclusion of this process and believes the acquisition at a 31% premium... represents a highly attractive outcome".
Drax boss Will Gardiner said it could be "the biggest acquisition our business has ever made".
7.31am: 'Opportunistic' EasyJet suitor emerges
EasyJet has responded after US private equity firm Castlelake disclosed on Friday that it was considering a possible offer for the airline.
The FTSE 100-listed budget carrier said it has not held any talks and has received no approach, but its board "will consider any proposal, should one be made", but stressed it would focus on both valuation and deliverability.
Castlelake's timing was described as "highly opportunistic", with recent months seeing easyJet's shares having sunk to three-year lows by the conflict in the Middle East.
The Minneapolis-based firm added that it holds a stake of roughly 2.14% in easyJet and, under the UK takeover rules, "would be required to make an offer at no less than 403.23 pence per share".
7.20am: FTSE 100 called lower, but US futures positive
The FTSE 100 is predicted to start in the red on Monday, as June begins with the same story seen in much of the previous three months: oil prices creeping higher on reports of more fighting in the Gulf as the US and Iran fail to come to an agreement.
London's blue-chip index has been called around 28 points lower on the futures market, having dropped roughly 82 points last week to end at 10,409.28.
However, the market picture is far from uniformly negative, with futures for Germany's DAX pointing slightly higher, Asian markets mostly in green, including gains for Nikkei and Hang Seng of 1.1% and 0.9% in Tokyo and Hong Kong, and US futures also positive, from 0.6% for the tech-powered Nasdaq and 0.1% for the blue-chip Dow Jones.
Brent crude oil is up 2.6% at just under $93.50 a barrel, above where it finished last week but not far from six-week lows.
Here's Deutsche Bank's Jim Reid with an update on the Iran situation, 93 days after the strikes from the US and Israel on Iran began, with 54 days since the truce that later became a ceasefire started.
"We've never felt closer to a deal but potentially never felt closer to it all falling apart with isolated strikes becoming more frequent, including some again over the weekend.
"It's hard to imagine remaining in limbo for much longer given that if the Strait of Hormuz remains closed into mid-summer it will at some point likely lead to a non-linear tipping point of economic stress.
"For now, it seems Mr Trump is still deciding on whether the current negotiations between the two nations satisfy his demands. He has been surprisingly quiet over the weekend which indicates things perhaps coming close to a head.
"Meanwhile, Israel and Hezbollah are trading attacks again, which complicates matters even if fresh ceasefire proposals are being worked on.
"We could have said this a week ago, but it really feels like the next few hours and days will be critical."