The FTSE 100 surged 300 points in minutes on Monday after Donald Trump said that he had ordered the Department of War to hold off striking power facilities after ‘constructive’ talks with Iran.
London’s leading index was down over 2% before Trump posted on social media that the US would postpone attacks on Iranian power plants, with fears of a prolonged oil shock sending waves through markets in the early stages of Monday’s session.
But Trump’s social post sparked a 300-point FTSE 100 rally from lows of 9,670 to 9,980 in a matter of minutes shortly before midday. However, comments from Iran that there was no open dialogue with Trump led to the rally fading.
Chris Beauchamp, Chief Market Analyst at IG, said: “Trump has sprung his usual surprise on markets, pausing strikes on energy infrastructure as a result of successful talks. But this leaves big questions unanswered – Hormuz remains closed, the damage to energy infrastructure is still there and it is unclear whether airstrikes on other targets will continue.
“While this was the headline investors have been hoping for, the fact that Brent has rebounded back above $100 shows that markets remain sceptical.”
Brent Crude oil was trading down 9% at $101.61, while WTI lost 8% to $89.69.
The FTSE 100 was 0.1% higher at 9,934 at the time of writing, with some of the stocks most heavily hit by the conflict among the best performers.
Hopes of a de-escalation in the conflict and the avoidance of a long-term energy shock were well received by interest-rate-sensitive sectors. Housebuilders rallied with Barratt Redrow gaining 3.5%. Persimmon was around 2% to the good.
HSBC rose 2.6% as FTSE 100 banks jumped. Barclays added 2%.
Croda was the FTSE 100’s top riser after Goldman Sachs raised their rating on the stock to a ‘buy’.
BP and Shell were among the biggest detractors as oil prices slid on hopes that the conflict was past its most dangerous point. Both oil majors were down more than 3%.
US futures were pointing to a higher US session, likely to be volatile, driven by any fresh headlines related to the Middle East conflict.