The FTSE 100 was higher on Friday as hopes of a peace deal between Iran and the US boosted sentiment going into the bank holiday weekend.
But we’ve been here before and traders didn’t get ahead of themselves with the FTSE 100 adding just 0.5% as of the time of writing.
“The market, having been burned before, is not getting too carried away on speculation about a US-Iran peace deal but the reports did lead to a higher open on Friday,” says AJ Bell investment director Russ Mould.
“Brent crude oil prices remain choppy amid claims and counterclaims between Washington and Tehran. Any deal will not restore a pre-war situation overnight, as fully reopening the Strait of Hormuz and getting regional energy infrastructure back on stream will take months.”
Oil remaining above $100 will act as a warning signal to equity investors not to get overly excited.
Bond yields were another detractor from any enthusiasm about a deal between the US and Iran, with the US 10-year hovering around 4.5%.
“Government bond yields remain elevated to reflect ongoing fears about the inflationary pressures unleashed by the situation in the Middle East, with gilts affected by weak UK retail sales and higher than expected government borrowing,” Russ Mould said.
“Miners, retailers, travel stocks and housebuilders were among those to make gains in London, while energy stocks and defensive sectors were on the back foot. This follows a pattern which has become familiar since the conflict started and hopes for a resolution have waxed and waned. Separately, data and software groups bounced back from the latest bout of AI disruption jitters.”
The lion’s share of FTSE 100 companies were higher on Friday as most sectors enjoyed an uptick in sentiment.
Croda was the FTSE 100’s top riser, with a 3.9% gain. A trading statement highlighted rising revenues and profits, helping boost Games Workshop, which added 3.5%.
ConvaTec was at the bottom of the leaderboard after Barclays and JP Morgan slashed their price targets on the stock.