Monday Morning Markets: FTSE 100, European Stocks Rise as US-Iran Peace Deal Sparks Risk-On Mood

Markets have opened the new week in a broadly positive mood following significant developments in US-Iran peace negotiations over the weekend, with a formal deal framework now reported to be in place. 

The geopolitical shift has significantly impacted commodity markets.

The FTSE 100 is up a modest 0.3%, but if you strip out the drag from energy majors, the picture could be brighter.

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Meanwhile, European peers are making more convincing gains, with the DAX up 1.5%, the CAC 40 up 1.2%, and the Euro Stoxx 50 up 1.2%. The UK-focused FTSE 250 is up 1%.

Miners Surge as Gold Jumps

There has been a rally in precious and base metals, driving London’s mining stocks sharply higher.

Spot gold has risen 2.6% to $4,328 an ounce, a move that reflects a weakening US dollar as risk appetite shifts in response to the peace deal. 

Miners are among the biggest beneficiaries.

Antofagasta (+6.63%) leads the FTSE 100 higher, with the copper giant surging on a combination of risk-on sentiment and optimism about global industrial demand now that a major geopolitical flashpoint is receding. 

Fresnillo (+5.76%), the silver and gold miner, is close behind, carried directly by goldand silver’s jump. 

Endeavour Mining (+5.25%) rounds out the top three, also riding the wave.

Oil Rout Impacts Energy Majors

The other side of the Iran peace deal coin is a sharp fall in oil prices. 

With the US blockade on Iran expected to be lifted, Brent crude is down 4.9% to $83 per barrel.

As a result, Shell (-3.90%) and BP (-3.70%) are the FTSE 100’s biggest fallers, unwinding much of the geopolitical risk premium that had been supporting both stocks through the tensions. 

With oil now trading firmly lower, the near-term earnings outlook for both majors has deteriorated.

Key Economic Data This Week

With the Iran deal dominating headlines, investors should not lose sight of a packed economic calendar that could move markets significantly in its own right.

• Tuesday: Watch out for the BoJ and RBA rate decisions.
• Wednesday: UK inflation data for May lands. However, the US Federal Reserve rate decision is the week’s centrepiece. Markets will be listening intently for signals on the Fed’s rate path.
• Thursday: UK unemployment data and a BoE rate decision are due.
• Friday: Japanese inflation data is scheduled for release. UK retail sales round out the week, offering a snapshot of high street health ahead of the summer.