The FTSE 100 was trading in a holding pattern on Friday as oil prices rose and a strong US session failed to spark any enthusiasm in London.
Investors were also digesting Andy Burnham’s by-election victory that sets him on course to challenge the Prime Minister. Gilts did take developments well, and the 10-year yield rose to 4.83%.
The FTSE 100 was down 5 points at the time of writing.
“The FTSE 100 was steady on Friday after gains on Wall Street yesterday, as investors largely shrugged off the latest political news in the UK,” says Dan Coatsworth, head of markets at AJ Bell.
“Oil prices ticked higher and Asian stocks dipped as negotiations between Washington and Tehran were apparently put on hold while Israel continued to pursue strikes against Lebanon. These developments are a reminder that for all the relief around a deal being agreed in the Middle East, there remain material obstacles to returning to a pre-war situation.”
While US stocks have stormed higher on the back of an agreement between Iran and the US, the FTSE 100 had a more tepid reaction and remains stuck in a trading range that’s held since the initial ceasefire was called in April.
London is suffering from the counteracting forces of oil majors’ share prices dropping due to falling oil prices, which have offset gains in interest rate-sensitive sectors such as retailers and housebuilders.
The inverse relationship between these two camps was on display again on Friday, with oil prices rising, helping BP rise 1%, while housebuilders dropped. Persimmon was down 0.5%.
“BP and Shell clawed back some of the ground they lost this week, while more defensive names found a bit of favour in London too. Banks were on the back foot along with retailers,” Coatsworth explained.
FTSE 100 constituents were split roughly 50/50 between gainers and losers on Friday, with the only major move coming from Admiral, which lost 5% on the back of a broker downgrade.