FTSE 100 Softer Monday Open on Iran Escalation; Brent Back Above $96, Gilt Yields Push Back Above 5%
London stocks are set for a weaker start on Monday as investors weigh the renewed US-Iran strikes uncertainty. The FTSE 100 is set to open around 10,380, down 0.77% from Friday’s 10,460 close. Brent crude is up nearly 3% to $96.50 a barrel; UK 10-year gilt yields are pushing back above 5% on the risk-off flow, reversing Friday’s sub-5% close. Sterling is softer at $1.3405 against the dollar; gold is firmer at $4,475 an ounce. The VIX is up almost 11% on the renewed war-risk premium. Asian futures and S&P futures both turned negative through the Asian session.
The Monday move is the cleanest single-day reversal of the Friday-Iran-deal-optimism trade. If the US and Iran exchange escalates further and the framework deal is formally abandoned, Brent is likely to test $105-115 within 48-72 hours and the FTSE could fall another 2-3% from current levels. The Beaufort Castle / Beirut southern suburbs Israeli ground push is the secondary risk-off catalyst. UK Treasury / Bank of England fiscal-policy positioning is now under direct macro pressure: the gilt-yield reversal above 5% materially tightens the Reeves cost-of-living-package fiscal headroom calculation, and the inflation pass-through from Brent-above-$95 will reset the Bank Rate cut probability for the next MPC meeting. Defence stocks BAE Systems, Babcock and Melrose are likely to lead Monday gainers; oil majors BP and Shell are mixed on the Brent rebound vs the broader risk-off.