The FTSE 100 reversed early losses on Monday, with defensive stocks drawing traders’ attention as geopolitical risks mount.
London’s leading index was trading 0.1% higher at 10,213 at the time of writing after touching lows of 10,151 earlier in the session.
“After finishing the previous week with heavy losses, the FTSE 100 made an uncertain start on Monday as the list of market worries continues to build,” said Dan Coatsworth, head of markets at AJ Bell.
“Hopes that a resolution between the US and Iran might be in sight continue to ebb away and that’s reflected in oil prices ticking higher. Meanwhile movements in government bonds imply a lasting and potentially worsening inflationary impact from the crisis.”
Relations between the US and Iran took a turn for the worse over the weekend as the UAE reported attacks on nuclear facilities, casting fresh doubt over a lasting ceasefire agreement.
“After a weekend of drone strikes on energy infrastructure in the Middle East and Russia, Asia-Pacific equity markets have started the week in the red,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“Since the Iran conflict began, concerns about energy supplies have been especially acute in the Far East, which is heavily dependent on oil imports. But the prospect of a prolonged period of elevated oil prices is weighing more broadly this morning.
“Brent crude has climbed by around $2 this morning to above $111 a barrel, adding to last week’s steep gains. An escalation in drone attacks between Ukraine and Russia is a reminder that it’s not only Middle Eastern oil exports being disrupted by conflict. Russia remains the world’s second-largest exporter and, while restrictions on exports to countries such as India have been temporarily lifted, those waivers are set to expire soon.”
Higher oil prices translated into gains for BP and Shell, which were 2.2% and 1.9% higher, respectively.
Utilities bounced back from a poor week last week, driven by concerns about bond yields. Centrica was the FTSE 100’s top riser, up 2.8%. National Grid was 2.3% higher.
But higher oil prices are bad for almost every other sector. This, combined with ongoing concerns about US and UK bond yields, culminated in another selloff of cyclical stocks.
Housebuilders were all lower, with Barratt Redrow the heaviest hit, at a loss of 2.9%. Barratt Redrow is the worst FTSE 100 performer of 2026 so far.
Miners and banks were lower as investors shunned riskier sectors.
3I Group was the FTSE 100’s top faller after RBC cut their price target to 2,000p