- FTSE 100 up closes up 49 points
- Oil lifted as Trump threatens to take Iran oil sites
- ECB raises interest rates for first time since 2023
- Halma plunges despite reporting record profit
4.55pm: FTSE closes higher
London stocks ended Thursday on a solid footing, with the FTSE 100 climbing 49 points, or 0.5%, to close at 10,304, as investors looked past escalating tensions in the Middle East and instead focused on sectors poised to benefit from higher commodity prices and elevated bond yields.
The benchmark spent much of the session in positive territory despite Iran's announcement that it would close the Strait of Hormuz following a fresh round of U.S. military strikes on Iranian targets. The move raised concerns about potential disruptions to global energy supplies and the prospect of another inflationary shock. Tehran also warned of further retaliation, adding to uncertainty surrounding a conflict that has already stretched on for three months.
Ordinarily, such developments would trigger a broad retreat from risk assets. Instead, investors rotated into globally exposed sectors that could benefit from the fallout. Financial stocks led the advance, supported by expectations that higher inflation risks could keep interest rates elevated for longer, a backdrop that tends to bolster bank profitability and support insurers.
4.07pm: Investors don't beleive Trump threats
Based on the moves in stock markets and oil prices, investors do not seem hugely worried about the war potentially escalating, based on Donald Trump's comments earlier.
It seems markets are still betting on the US and Iran agreeing a deal, says market analyst Chris Beauchamp at IG.
This means the FTSE 100 is "enjoying its best day in a month", he says, with a broad rally for global equity markets today.
"It marks the second time in 48 hours that bulls have attempted to seize control of the tape, and is all the more impressive given that it takes place to a backdrop of higher US PPI, a hiking ECB and Oracle’s disappointment last night."
Beauchamp says Trump is "running through the Iran war hits of three months ago, only much faster", with new threats on his social media platform every day, with a seizure of Kharg "back on the agenda".
But oil prices are below their highs of last night, with Brent below $93 a barrel.
Traders are taking the view that Trump's "clear preference for a deal points towards an attempt to pile on the pressure on Iran to get an agreement across the line".
3.40pm: Halma a 'buying opportunity' after results sell-off
Halma shares are down 17% now. Panmure Liberum analyst Alex O'Hanlon has increased his earnings per share forecast on the back of today's new outlook and results where broad-based growth demonstrated "the strength of the model".
But the outlook was "clearly not enough for the market", with the shares sent tumbling after the results announcement.
"This creates a buying opportunity," O'Hanlon says.
He stresses three points: Halma’s equity story is "about much more than just Photonics", that it is "investing from a place of strength" in R&D and M&A to "drive strong organic growth in the outer years", with 2027 net/debt EBITDA of 0.6x "leaves significant firepower for further acquisitions".
He lifts his target price from 4,270p to 4,620p, saying a "medium term P/E of 19.5x based on the targets is attractive given the strong track record".
2.58pm: Intel and semi stocks lead Nasdaq higher
US stocks have joined in the day's positive mood, with the Dow Jones and Nasdaq both up 0.8% in the first half-hour of trading.
The S&P 500 is up 0.6%.
Nasdaq risers are led by Intel, up almot 10%, followed by Applied Materials, ARM Holdings, Lam Researchm, AMD, ASML and Marvell.
2.36pm: US inflation analysis
The US PPI inflation report shows "an intensifying shock to goods prices and an uptick in underlying services prices too", says economist Sam Tombs at Pantheon Macroeconomics.
Prices for finished consumer goods, excluding food and energy, rose by 0.3% in May, "but faster increases lie ahead".
Prices for processed materials used as intermediate inputs, also excluding food and energy, rose by 1.8% in May, which Tombs says suggests if part of an "upstream pressure" consistent with final demand prices for core goods rising at a 5% yearly pace over coming months.
A 0.9% rise in prices for services excluding trade services was broad-based, he adds.
Looking ahead, the economist sees core PCE inflation was likely to be "little changed over the summer", with core goods prices responding to the recent jump in energy prices, "but base effects stemming from last year's tariff-related price rises will anchor the year-over-year rate".
Thereafter, he thinks inflation will "fall sharply around the turn of the year", meaning the Fed "will be less worried about inflation risks by the end of this year, reopening the door to rate cuts if the labor market falters again".
2.18pm: ECB move today reflects too-slow reaction in 2022
The ECB today announced the first rate hike since September 2023, lifting the main policy rate to 2.25%.
This is "an attempt to preemptively tackle increasing inflation and to demonstrate its inflation-fighting spirit", says Carsten Brzeski, macro chief at ING.
Officially, today’s decision is "an attempt to stay ahead of the curve, as an inflation wave is clearly hitting the eurozone economy".
"Unofficially, however," Brzeski says, "we can’t shake the idea that the ECB is actually fighting ghosts from the past. Specifically, the far-too-late reaction to the inflation shock in 2021 and 2022."
At the time, the ECB dwelt too long on the idea that an inflation surge driven by supply shocks was 'transitory' and could be looked through.
"If not for the experience of 2022, 'transitory' could well be the label used today," he says.
The increase in headline eurozone inflation has remained moderate, so far, he observes, while the knock-on effects of higher energy prices on transportation and food "will be hard to avoid", actual survey-based inflation expectations have actually come down a bit.
The ECB staff projections today are that headline inflation will come in at 3.0% this year, fall to 2.3% in 2027 and then 2.0% in 2028, slightly up from the March projections.
GDP growth is forecast to be 0.8% this year, rising to 1.2% and 1.5% the next two years, slightly down for 2026 and 2027 compared with the March projections.
"Overall, not a forecast that immediately calls for aggressive rate hikes."
1.46pm: US PPI inflation hits highest in over 3yrs
US factory gate inflation data is in.
May's producer price index for final demand was up 1.1% month-on-month, and up 6.5% year-on-year, the sharpest 12-month gain since late 2022.
Monthly PPI eased from 1.4% previously, but was above the 0.7% consensus estimate. Annual PPI was up from 6.0% and higher than the 6.4% forecast.
US Treasury yields spiked a little on the news but not much.
1.27pm: ECB hikes, Trump flags more US strikes
Starting with perhaps the least expected, Donald Trump has said the US will conduct strikes on Iran "very hard tonight".
He adds, in his social media post: "At some point in the not too distant future, we will be taking Kharg Island, and other oil infrastructure points, and assume total control of their oil and gas markets, much like we have with Venezuela, which is working out brilliantly for both Venezuela and the United States of America."
Oil prices have spiked, though not massively (yet).
Also, a short while ago, but as expected, the European Central Bank lifted its three main interest rates by a quarter of a point.
Its deposit and main refinancing rates were lifted to 2.25% and 2.40% respectively, matching the consensus forecast. The marginal lending facility rate was also increased by the same amount to 2.65%.
The ECB said its governing council "is committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term" and raised rates in line with this commitment.
"The war in the Middle East is generating inflation pressures, and the decision to raise rates is robust across a range of scenarios mapping out how the shock might evolve and affect the medium-term outlook for the euro area."
The FTSE, which was up over 100 points, dropped on the news.
12.42am: SpaceX allocation to come through "in early hours"
There remains some doubt among brokers and investment platforms over when exactly they will get the information on what allocations of SpaceX shares for clients.
As I understand it, the exact timing is unknown, but some time on Friday morning the numbers will come through from SpaceX and the investment banks running the process.
One major UK platform, Hargreaves Lansdown, tells me they expect the total allotment to UK retail to be announced in "the early hours" and will then have a team "working overnight to get that allocated to individual client accounts before the US market opens tomorrow afternoon".
There may be a few investing newbies for whom this is their first foray into US shares as well as putting money into an IPO before trading begins. To them I flag that US markets open at 2.30pm UK time.
Once the opening auction completes, which HL expects could take a few hours, "clients should then be able to deal as usual". They have created a useful article on what's happening tomorrow here.
12.01pm: London heavyweights lead rally
Just after midday, the FTSE is up almost 100 points, as oil prices fall and the index's heavyweight miners and lenders get a boost from China.
What's a bit unusual is that around a third of the index is in the red, led by Halma's 16% plunge and including software, housebuilding and engineering names.
It's the make-up of the gainers that matters today, with all but one of the top 10 largest names in green and all but two of the top 20.
What's more, the index's largest company, HSBC, is up around 3% and the top six larges companies are all up, with half of them up 1.7% or more.
In a strategy note today, UBS says it remains "constructive" on UK equities, arguing that valuations remain reasonable and earnings growth is improving.
The Swiss bank notes that UK stocks trade on 12.4 times forward earnings, slightly below the long-term median of 12.8 times since 1990.
"The recent surge in oil prices has lifted our earnings growth expectation for this year to 11% (we began the year expecting 5% growth), but we also see robust earnings growth of around 10% continuing into 2027, with improving economic growth offsetting an expected rollover in oil prices.
"This should continue to support UK equities, but we see a brighter outlook for other regions."
If energy disruptions are relatively short-lived, UBS sees greater potential for gains in more cyclical markets that have experienced the most weakness in recent months, "with the UK's high exposure to the energy sector also likely to weigh on it".
The FTSE 350 also has a relatively low weight in the industrial sector "and therefore may not benefit as much from the manufacturing pick-up we're anticipating, which is in part supported by some investment intensive secular themes, such as AI, electrification and defense spending.
"This does not mean that the UK offers no secular growth opportunities, but rather that these opportunities are better accessed via single stock selections within the UK market. This also explains the very narrow market leadership of the UK over the past 12 months.
"So while the FTSE 100 is up 17.4% over the last year at the time of writing, the median stock in the index is up just 8.8%s."
11.19am: PRU gets UBS lift
Prudential is up 4%, helped by UBS analyst Nasib Ahmed arguing that fears over potential Chinese restrictions on funding Hong Kong insurance products are already reflected in the share price.
The shares are recovering some of the losses suffered earlier this week, with the stock having fallen around 5% over the past two sessions and down about 19% since regulatory measures affecting some mainland Chinese investment channels were announced on 22 May.
The analyst estimates a worst-case regulatory scenario could cut Prudential's valuation by 11-18%, but noted the shares have already underperformed the European insurance sector by a similar amount since May.
10.48am: What's happening with SpaceX today?
Ahead of SpaceX's audacious IPO tomorrow, today would normally see pricing of the shares decided, but since boss Elon Musk has already set a non-negotiable price of $135 a share, today's focus will be on the allocation for underwriters, asset managers and investment platforms.
This will allow investors to know where they are before trading begins, in what is set to be the largest IPO in history.
Musk wants retail investors to get an allocation of around 30% of the $75 billion of shares in the offer, which is much higher than the usual share of 5-10%.
Kathleen Brooks, head of research at XTB, says the high retail allocation is to "cash in on Musk’s cult-like status".
However, she notes that the retail trading market is "made up of more than just Elon Musk’s fan club", with non-institutional investors contributing 20-30% of daily volume in major developed markets like the UK and the US.
UK and US investors who have applied for the IPO, will be contacted tomorrow before the US open to confirm how many shares they have been allocated.
Analyst Dan Ives at Wedbush says the listing "represents the first major test for public markets after years of muted IPO activity with SpaceX paving the way for AI giants Anthropic and OpenAI to follow soon after".
He also believes the SpaceX anticipation has "caused some added volatility in the market especially in the tech sector as traders/investors anticipate the ripple impact of this historical IPO."
10.04am: China boost for London index
A key boost to the Footsie is China-focused trio HSBC, Prudential and StanChart.
"As has often been the case during the Iran conflict, the UK’s flagship index has found support from its collection of energy companies and more traditionally defensive names," says AJ Bell market analyst Russ Mould.
He says miners and China-linked stocks were "lifted by data suggesting the country is investing heavily in AI and consuming raw materials at a healthy rate".
"Selling in AI-related stocks, of which London has very few, put shares on Wall Street under pressure yesterday and that’s extended to Asia today."
Oil prices, he says, are "partly helped by sluggish demand from China with imports falling as the country relies on its own stockpiles and expands its use of alternative energy".
On Halma's big fall, Mould says the safety products group is "paying the price for setting high standards for itself" and that investors "didn’t like conservative guidance for the new financial year".
With revenue growth expected to slow and margins remain broadly unchanged, he adds that "this could represent a sensible dose of conservatism from management against an uncertain backdrop".
Halma, thanks to its focus on safety-critical and regulation-driven markets, has been prized for its consistency.
"While this was still on display given the 23rd consecutive year of profit growth and 47th consecutive year of dividend growth of 5% or more, the subdued outlook has created doubt over whether this track record will be sustained in the future."
9.26am: FTSE climbing as oil backs off
The FTSE 100 has continued to stride higher, now up 48 points to 10,303, with European peers and US futures also in the green.
The DAX is the laggard in Europe, only just above the flatline, while in Paris the CAC 40 is up 0.4%, while Milan and Madrid benchmarks have climbed 0.9% and 0.7%.
Across the pond, the Nasdaq 100 is currently predicted to rebound 1.3% after the hefty fall overnight, with the Dow and S&P called 0.7-0.8% higher.
Oil prices are continuing to ease back, with Brent now down 1$ to $92.18 after the US said it has completed strikes against Iran.
"European stock markets are holding up ok ahead of an expected ECB hike," says market analyst Neil Wilson at Saxo, as oil backs off.
He says yesterday's tale of the tape was that "risk was under pressure" as US CPI inflation rose and President Trump issued threats to Tehran for being too slow to make a deal.
Later today comes US PPI inflation, which a month ago sparked a move in bond markets as it brought "the first realisation that the next move from the Fed is to hike, as long as the labour market stays strong (which Friday’s data supported)".
9.11am: Frasers bids for Boss
Mike Ashley's Frasers Group fell 2.5% in early trade but is back to flat after making a $2.3 billion takeover offer for Hugo Boss.
Frasers, which is a 26% shareholder, has made an approach for the German fashion label at €38 a share.
This is the equivalent to a 4.3% premium to yesterday’s closing price.
Boss shares have climbed 6.9% to a premium to the offer price at €38.98.
This suggests that "investors believe an improved offer or a rival bid could emerge with the former of the two looking more likely", says Victoria Scholar at ii.
"Frasers Group has a long history of building up stakes in struggling retailers over time, with several UK acquisitions bought out of administration.
"Hugo Boss’s share price has declined in recent years, down almost 50% from its 2023 highs, suffering since the post-pandemic boom.
"However the difference this time is that Hugo Boss is a German brand, with a strong global reputation that has been delivering improved results lately thanks to a fruitful turnaround plan, although sales and profits still fell in the first quarter highlighting how there is still a lot of work to do."
8.43am: Wizz climbs
Wizz Air shares are up 2.7% as results for the year to March were in line with its most recent guidance.
They were "marginally ahead of potentially stale consensus", says Gerald Khoo at Panmure Liberum, with €1.3 million of profit after tax down 99.4% but better than the consensus forecast for around a €50 million loss.
Management giving limited guidance reflects the geopolitical uncertainties, Khoo notes, adding that capacity growth is still set to accelerate but unit revenues are under pressure and unit costs are set to rise.
Non-fuel CASK (cost per available seak kilometre) is guided to between flat and up by a low single digits in the first half, with fuel hedging increased but with dramatically higher spot prices for the balance.
"In our view, this points to a margin squeeze in H1, which is the seasonally profitable half of the year for the group," Khoo says, also flagging a balance sheet that still is not yet comfortable.
Net debt/EBITDA is at 3.7x, "albeit better than the 4.4x from a year ago", with gross cash €2.1 billion, "but Wizz Air has no further depth to its balance sheet with no unencumbered aircraft assets and no undrawn credit facilities".
8.26am: Halma plunges
Halma's revenues and profits came in ahead of expectations, so why this reaction from the market, with the shares down over 11%?
The answer is probably valuation rather than performance, with the shares having risen around 32% since the start of the year before today.
Analyst Alex da Silva O'Hanlon at Panmure Liberum also notes that Halma trades on around 36 times 2027 earnings, versus a sector average of 22 times, so leaving little room for disappointment even if he thinks it "remains justified".
He says management's guidance for "low double-digit" organic revenue growth in the 2027 financial year should even drive modest upgrades to consensus forecasts, while margins are expected to remain at the strong 22.7% level achieved in the past year.
However, investors may also be focusing on what analysts call "concentration risk" in the fast-growing photonics business, which serves the data centre industry. Revenue from a single photonics customer rose from 15% to 20% of group sales during the year.
8.15am: FTSE 100 surprises by starting higher
The FTSE 100 has opened higher, lifted by gains for China-focused financials, miners and utilities.
In opening trades, the London benchmark has inched up 30 points to 10,287.
Asia-focused Prudential, Standard Chartered and HSBC are three of the top-four on the leaderboard, up 3.2% to 2.3%.
Intertek is up 3% after private equity firm EQT was allowed to extend its put-up-or-shut-up deadline to come up with a firm offer.
Other risers include utilities Airtel, Vodafone and Centrica, while commodities-related names are also bid, including Fresnillo, Rio Tinto, Anglo American, BP and Shell.
Halma has dropped sharply, down 11.7%.
7.59am: Wizz profits collapse
Wizz Air has reported a total collapse in profits after aircraft groundings, higher costs and disruption in the Middle East offset record passenger growth.
Net profit slumped to just €1.3 million in the year to 31 March from €213.9 million in the previous year, while operating profit fell 17% to €139.7 million.
This was despite the low-cost airline carrying 10% more passengers and revenue rising 8% to €5.69 billion.
Despite a positive start to the new financial year, following a redeployment of capacity to core Central and Eastern European markets, Wizz has declined to provide full-year guidance, citing uncertainty surrounding the conflict with Iran and the closure of the Strait of Hormuz.
7.40am: Halma hikes dividend, but less than expected
Halma lifted its dividend 7% to continue its run of successive hikes to a 47th year, though the amount was below analyst forecasts.
The provider of safety, environmental and healthcare technologies reported revenue of £2.58 billion in the year to March, up 15% from the previous year and ahead of the £2.56 billion City consensus.
Adjusted earnings before interest and tax jumped 22% to £594.5 million, well ahead of the £567.9 million average estimate.
Looking ahead, the board says the company "made a positive start to the 2027 financial year, with a strong order book and order intake ahead of revenue and last year".
FTSE 100 pre-market open
Stocks in London and mainland Europe are expected to open lower on Thursday as energy prices reared their ugly head again, while later in the day SpaceX is likely to grab attention.
The FTSE 100 has been called 33 points lower, after battling back from a sim ilar position yesterday to close roughly 27.5 points higher at 10,254.81.
On Wall Street overnight, stocks suffered a steep selloff after inflation data came at a three-year high and renewed geopolitical tensions in the Middle East dashed hopes of prices easing soon.
The tech-heavy Nasdaq and the blue-chip Dow Jones both fell sharply, down 2% and 1.9% respectively, while the S&P 500 dropped 1.6%.
This morning, Asian stocks are mixed, with Chinese markets in red, but others just above flat.
Brent crude oil topped $95 a barrel overnight, but has eased back to $93.85 this morning despite the US having launched further airstrikes on Iran in the early hours, following Donald Trump's warning that Tehran would "pay the price" for the slow pace of negotiations.
Iran directed retaliatory strikes towards Bahrain, where the US Navy fleet is based, as well as Kuwait and Jordan.
As for SpaceX, demand is reported to be strong, with the IPO oversubscribed more than four times. Today, with the price already set at $135 a share, the retail allocation and broker allocations are due to be sorted.
The company said it would stop taking orders yesterday to allow time for share allocation today, according to CNN, with a higher-than-usual retail allocation of 30% planned.
