The FTSE 100 jumped on Friday after the US President claimed a deal with Iran that would see the opening of the Strait of Hormuz could be struck as soon as this weekend.
Iran, however, said nothing had been finalised.
We’ve been here before on a number occasions so although the market reaction was positive, it fell short of the euphoric surge in stocks we’ve experienced in the past.
The FTSE 100 was trading 1.1% higher at the time of writing, but still within the trading range it has resided since Trump first announced a ceasefire in April.
“Investors were in a buoyant mood as hopes of a peace deal between the US and Iran were revived, having seemingly dropped off the table earlier in the week,” said Dan Coatsworth, head of markets at AJ Bell.
“The maxim ‘once bitten, twice shy,’ isn’t being applied by the market when it comes to Donald Trump’s pronouncements, as his latest of several suggestions a deal is close has helped to drive stocks higher once more.
“Oil is heading in the opposite direction, with the Brent crude benchmark dropping and sticking below $90 per barrel for only the third time since the Middle East conflict began.”
Away from the Middle East, attention today will be firmly on SpaceX after the company raised $75bn in the largest IPO the world has ever seen. Elon Musk is set to become the world’s first trillionaire as shares start trading, but it’s not just Elon Musk’s fortunes that will be impacted by the IPO.
There are mixed views on the IPO with some analysts calling for a much higher valuation while some believe IPO investors have overpaid.
Whichever way the SpaceX share price goes in the coming weeks, it will likely have an impact on sentiment and equity market performance.
In London, airlines reacted well to falling oil prices with IAG leaping 6% higher to the top of the leaderboard.
A deal between the US and Iran would also mean the aversion of damaging inflation and interest rate cuts. This helped Housebuilders higher.
Oil stocks were the inevitable losers with a proposed deal to open the Strait of Hormuz in sight.
BP and Shell were both down over 3% and were at the bottom of the leaderboard.