The FTSE 100 ticked higher on Friday as investors breathed a sigh of relief after Trump said he would decide on Iran strikes within two weeks, marking a de-escalation from comments made earlier in the week.
“The chances of the immediate involvement of US forces in the Israel-Iran conflict have receded after Donald Trump said he would make a decision whether to attack Iran’s nuclear development facilities ‘within the next two weeks’,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“Diplomatic efforts to de-escalate the situation are also in train with a delegation from the UK, France and Germany set to hold talks with Iranian officials in Geneva later today.”
It’s worth noting that Trump has set two-week deadlines before. Many have either been extended or never been acted on.
The relief that the US would take more time to consider a strike that threatens a wider conflict was felt in UK stocks, and the FTSE 100 was trading 0.4% higher at the time of writing.
“Markets recovered some ground as the US appeared to temporarily pull back from the prospect of intervening directly in the Israel-Iran conflict,” says AJ Bell investment analyst Dan Coatsworth.
“Trading in Asia was mixed as China kept interest rates unchanged, while the US market was closed yesterday for the Juneteenth federal holiday. Early on Friday, futures prices implied modest weakness when Wall Street opens later on.
“Airlines, banks and other financials were among the stocks leading the way in London. Among the laggards, housebuilders were weak after Berkeley’s full-year results disappointed, and Shell and BP surrendered some of their recent gains as oil prices eased back from the highs seen earlier this week.”
Berkeley Group
Berkeley Group Holdings was rooted to the bottom of the FTSE 100 leaderboard after issuing guidance for lower profits in the year ahead as it counts the cost of poor economic conditions. Berkeley shares were down 7% after saying it saw profit before tax at £450m this year after recording over £500m last year.
“The departure of its chair and a warning that returns will be below targeted levels in the medium term put housebuilder Berkeley on the back foot,” Dan Coatsworth said.
“The company is guiding for a substantial drop in pre-tax profit for the current year and for profit to remain flat in the year afterwards, with the relatively downbeat outlook reflecting a volatile operating environment.
“Berkeley previously earned a reputation for shrewdly calling the housing market cycle, so the company’s conservative guidance in its latest results announcement has made investors sit up and take notice. That’s caused shares across the housebuilding sector to fall.”
Apart from Berkeley Group, there were no major losers on Friday.
Melrose topped the leaderboard again as the engineering group continued its recovery from Trump-induced losses. The stock was 4% higher at the time of writing.
Cyclical sectors were in favour with FTSE 100 miners Glencore and Antofagasta rising. Standard Chartered had a solid session, adding 2%.