The UK's FTSE 100 soared to a one-month peak on Wednesday, buoyed by a recent agreement between the United States and Iran for a two-week ceasefire. This news sent global markets into a frenzy, while oil prices took a notable dip. President Donald Trump announced the ceasefire just hours before a deadline he had imposed on Iran, which demanded the opening of the blocked Strait of Hormuz or face dire consequences for its "whole civilisation". This unexpected development boosted market confidence as traders anticipated the potential resumption of shipping through the strait, a vital artery that transports approximately 20% of the world’s oil and liquefied natural gas.
FTSE 100 index initially surged by 2.9%, reaching its highest mark since March 3, while the mid-cap FTSE 250 experienced an impressive 4.5% increase, also marking its peak since March 10. However, major oil companies like BP and Shell saw their shares drop over 5% each, reflecting a nearly 15% fall in crude prices. Shell also revised its first-quarter gas production outlook downward while hinting at a rise in oil trading profits, revealing the immediate impact of the Middle East conflict on the earnings of oil giants. In other news, shares of Gamma Communications surged nearly 14% after the British telecom company announced it is in preliminary talks with several parties regarding a potential sale. In contrast, all other major sectors within the FTSE 350 enjoyed gains, particularly rate-sensitive homebuilders, banks, and travel firms. Investors are now anticipating around 35 basis points of interest rate hikes from the Bank of England this year—equating to one or two quarter-point increases—down from 63 basis points just a day earlier. In a surprising turn, British house prices fell unexpectedly last month as economic uncertainty linked to the Iran conflict dampened buyer enthusiasm, according to mortgage lender Halifax. Meanwhile, British Prime Minister Keir Starmer is set to visit the Gulf on Wednesday for discussions with regional leaders aimed at ensuring that the Strait of Hormuz remains open permanently following the U.S.-Iran ceasefire.
TECHNICAL & TRADE VIEW – FTSE100
Daily VWAP Bullish
Weekly VWAP Bearish
Above 10750 Target 11200
Below 10400 Target 10100
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